Can We Really Grow Our Way Out Of’ $40 Trillion in National Debt? Why One Economist Says The US Has No Chance.’ Sarah Holzmann Tue, August 25, 2026 at 9:11 AM PDT 4 min read When the national debt topped $40 trillion last week, it was a round-number milestone that grabbed mainstream media attention. It also coincided with a rough week in the news for Treasury Secretary Scott Bessent, whose intervention in the bond markets was widely viewed as a failure. Undeterred, Bessent on Thursday seemed to dismiss the ballooning national debt as a relative blip on the Treasury's radar. More News from Barchart Why This Week Looks to Be Fun Dollar Moves Higher as US Ramps Up Pressure on Iran Dollar Gains on Weak Stocks Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. "There's nothing magic about the $40 trillion number, and we can grow our way out of that," Bessent told CNBC host Sarah Eisen. Likewise, Vice President JD Vance said Thursday night that Bessent has a plan, backed by President Donald Trump, "to get the United States to a point where our economy is growing faster than our debt." "So, even though the debt is too high, even though we inherited this debt bomb from the Biden administration, we actually do have a plan to get the economy growing faster than the debt and that's the most important thing," claimed Vance during a Newsmax appearance. The debt-to-GDP ratio now stands at approximately 122-124%, and many economists note that what matters most is this ratio rather than the absolute dollar figure. However, leading budget economists and fiscal analysts are deeply skeptical that growth alone can close the gap. Critics note that without structural reforms to expenditures and revenues, including potential reversal of recent tax cuts and healthcare system overhauls, tackling $40 trillion in debt through growth alone represents wishful thinking rather than credible fiscal strategy. Why the US Can't Grow Out of $40T Kent Smetters of the Wharton School has called the growth strategy a "fantastic story" that is "pretty clearly" not feasible, arguing that people have the causality reversed i.e., addressing debt supports growth, not the other way around. Bridgewater Associates founder Ray Dalio has warned that a debt crisis could materialize within three years and called on the government to reduce budget deficits to approximately 3% of GDP, roughly half their current level of nearly 6%. According to research from Fiscal Lab on Capitol Hill, the real GDP growth rate would need to average approximately 4.31% annually over the next decade to eliminate the deficit through growth alone, which is more than double the Congressional Budget Office's projected baseline growth of 1.8% per year through 2036. Story Continues In other words: "The US has no chance of growing out of its debt problem through growth only," said Alicia Garcia-Herrero of Natixis, chief economist for the Asia-Pacific region at Natixis, as reported by the South China...
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