The chief executive of Goldman Sachs says the government will eventually be forced to get its finances in order as America’s debt burden hovers at historic highs.
The latest data from the Congressional Budget Office (CBO) shows that the federal deficit will total $1.9 trillion this year and average $2.4 trillion annually from 2027 through 2036.
Under the CBO’s baseline forecast, federal debt held by the public is expected to rise from 101% of US GDP at the end of 2026 to 108% by 2030, surpassing the previous record of 106% set in 1946. Debt is projected to reach 120% of GDP by 2036 and continue climbing in the decades that follow.
According to the CBO, mandatory outlays, including Social Security, Medicare and Medicaid, are the biggest contributors to the rise in deficits this year.
“Mandatory outlays are projected to rise by $362 billion (or 9%) in 2026, to $4.5 trillion.”
The CBO adds that the US will also spend more than $1 trillion this year to pay off the interest on its national debt.
Amid the soaring US deficits, Goldman Sachs CEO David Solomon says America has a lot of room to maneuver for now, given that the dollar is the world’s reserve currency. But he warns that the room to make changes won’t last forever.
“Look, we have a lot of latitude. There’s a lot of talk about the dollar. And at the end of the day, there aren’t great alternatives. And so given how important the US is in the economic ecosystem of the world and the dollar is in the economic ecosystem of the world, we have more latitude than other nations to do this.
But I do believe if we don’t get it under control, we don’t get our growth rate up, there will be a moment in time where we have speed bumps or shocks or things that force us to readjust our behavior.”
At time of publishing, the US national debt stands at $36.647 trillion.
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