Trump and Treasury chief argue growth cannot erase $40 trillion U.S. debt

The administration faces scrutiny as the national debt reaches $40 trillion, prompting Trump to assert that unprecedented economic growth will eliminate the burden and Bessent to describe the number as non-magical, suggesting growth as a remedy. Experts point out that the debt-to-GDP ratio, now at 122%, is the key indicator, and that reducing borrowing or stimulating growth are the two main levers. Wharton economist Kent Smetters contends that growth does not solve the debt issue because increased productivity also inflates Social Security, Medicare and Medicaid outlays.

Treasury officials have responded to rising 30-year Treasury yields by buying back billions of dollars of debt, while policymakers weigh additional measures like deficit-reduction targets and a possible budget commission. Voter sentiment ahead of the midterms shows only a small share see debt as a decisive issue, but the credibility of any plan remains crucial to market confidence.