‘There is no silver lining in this trajectory’: Budget watchdog warns of financial, inflation, or currency crisis due to $39 trillion U.S. debt

As U.S. national debt trips over the $39 trillion mark, calls for targets on government borrowing are increasing, as budget watchdogs warn the nation’s fiscal trajectory is increasingly unstable.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), appeared before the House Budget Committee yesterday to make the case for why the government—now or in the future—should commit to a benchmark of a deficit-to-GDP at 3%.

According to the St. Louis Fed, that figure currently stands at 6%, meaning the government must either significantly curb its spending or meaningfully grow the economy if it wants to bring the balance into closer equilibrium.

MacGuineas said the federal budget is “desperately in need of a course correction.” The figures now attached to the national debt are eye-watering: The Congressional Budget Office (CBO) confirmed earlier this month that the Treasury added another $1 trillion to the federal deficit in the first five months of the year.

The monthly budget review from the CBO, updated to February 2026 and released in the second week of March, showed that the government is estimated to have borrowed $308 billion last month alone.

Of course, more borrowing also means increased service payments on that debt. By 2036, the White House will need to rustle up more than $2 trillion a year to pay the interest on its national debt burden, equivalent to approximately 5% of the nation’s entire economy, according to estimates from the CBO.

MacGuineas said the severity of the U.S. fiscal situation “calls for bold action and making the necessary tradeoffs to reform entitlements, secure federal trust funds, reduce spending, raise revenue, and put in place other reforms and efficiencies that reduce deficits.”

The economist highlighted that six forms of fiscal crises are becoming all the more likely if the U.S. continues to borrow at pace, without growing the economy quickly enough alongside it.

Those include a financial crisis, when a lack of confidence in U.S. Treasuries leads to panic among traders and a spike in interest rates—a concern which the likes of JPMorgan Chase CEO, Jamie Dimon, has previously highlighted.

An inflation crisis could be another, whereby financial repression is used to lower the value of the money supply and hence, the value of the debt. “For those worried about the issue of affordability,” MacGuineas added, “high and rising national debt is a huge concern.”

And then there is austerity, where the government is forced to sharply increase taxes and cut spending, or a currency crisis, where the U.S. dollar faces a significant depreciation, or a default crisis where policymakers explicitly or implicitly indicate they can’t make payments or restructure existing debt.

A gradual crisis is the final outcome, where living standards and monetary flexibility are gradually eroded.

“Simply put, there is no silver lining in this trajectory,” MacGuineas added. “We are in a period of alarmingly high debt levels despite a growing economy and several demographic challenges ahead.”

Why bother?

The argument to counter such measures is simple: The U.S. economy has survived and thrived for many years despite its growing pile of debt.

Inflation is yet to spike, the dollar remains the global reserve currency, and the bond markets are holding steady: There is no indication that traders are losing faith in the safe harbor that is the U.S. economy.

The point budget hawks make is that just because borrowing hasn’t posed a problem yet doesn’t mean it won’t. Texas Republican Rep. Jodey Arrington, chairman of the House Budget Committee, pointed out earlier this week that it had taken 200 years for the national debt to hit $1 trillion, a figure that is now paid out annually in interest payments alone.

MacGuineas said: “It took decades to get us into this hole, and it will take a concerted effort to get out of it. While some may wish to focus on how we got here, the more productive approach would be to admit where we are and take steps towards reducing our high and unsustainable borrowing.”

This story was originally featured on Fortune.com