Economist warns that $40 trillion US national debt threatens future generations

Michael A. Peterson, CEO of the Peter G. Peterson Foundation, outlines the fiscal challenges confronting the United States and explains why policymakers must pursue solutions.

The U.S. gross national debt exceeded $40 trillion last month, marking a historic first. Although the federal government continues to accumulate debt at an accelerating pace, fiscal pressures loom for both current officeholders and those seeking election in upcoming contests.

Earlier this year, the Social Security and Medicare Trustees reported that the primary Social Security trust fund is on track to be exhausted by 2032, which would trigger automatic 22% benefit reductions. Simultaneously, rising national debt and higher interest rates have driven up the cost of servicing the debt, making it a rapidly expanding segment of the federal budget that now surpasses defense spending.

Michael A. Peterson told FOX Business that the debt surge is an urgent problem, stating, “$40 trillion is enough stealing from our next generation; it’s time to act.” He added that the growing debt harms the economy, wages, affordability, and specific government programs.

The main Social Security trust fund is on track to be depleted in 2032. (Jim West/UCG/Universal Images Group via Getty Images)

Peterson warned, “In just six years, the Social Security trust fund will be depleted. If Congress takes no action, beneficiaries will face an immediate, across‑the‑board 22% cut to their benefits.” He called such neglect unacceptable and urged immediate reform.

The United States national debt has reached $40 trillion for the first time ever.

With Social Security’s insolvency projected just six years away, any senator elected in this fall’s midterms and the next president chosen in 2028 will serve terms that extend into 2032, when the trust fund is expected to be exhausted.

Social Security, Medicare, and interest expenses are the fastest‑growing contributors to the annual U.S. budget deficit, which is forecast to exceed $2 trillion for fiscal year 2026, ending this month. As debt climbs and interest costs rise, alongside an aging population, deficits are projected to widen further.

Peterson observed, “We are effectively taking $2 trillion from our future, spending it now, and leaving our children and grandchildren with that debt plus all the accrued interest.” He noted that interest payments are the fastest‑growing budget item and are on track to double within the next decade.

The federal budget deficit is on pace to surpass $2 trillion this fiscal year as spending outpaces revenue.

Peterson pointed out that, unlike external geopolitical challenges from China, Russia, Iran and others, the U.S. government can shape its own budgetary policies to enact reforms that stabilize or reduce deficits—and consequently the national debt.

He said, “The solutions are well known. Through tax policy we have numerous revenue streams we can adjust over time to raise more income and lower deficits. On the spending side, many programs offer alternative approaches.”

The U.S. national debt has now surpassed the size of the economy for the first time since World War II.

Congress will have to reform Social Security before the trust fund’s insolvency to avoid automatic benefit cuts. (Demetrius Freeman/The Washington Post via Getty Images)

Peterson noted that the Peterson Foundation launched the Solutions Initiative, convening seven think tanks across the political spectrum to devise strategies for stabilizing the national debt as a share of GDP. The debt‑to‑GDP ratio reached 100% this year for the first time since 1946 and is projected to approach 200% over the next quarter‑century.

He explained, “The outcome depends on your ideological preferences—how much revenue you wish to raise, how much spending you are willing to cut, and the mix that works for you.” He added that all seven proposals succeeded in stabilizing the debt.

Peterson continued, “Numerous combinations and opportunities exist; we do not need to invent new solutions. What is required is the political courage to begin.”

Finally, he remarked, “Although the path may involve higher taxes or reduced spending—actions that can feel politically risky—I believe Americans are prepared to accept these measures because they recognize the current trajectory is unsustainable and detrimental to their long‑term future.”

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