VoxTalks Economics S9 Ep5: Is US debt sustainable?
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Jan 21, 2026 
Antonio Fatás, an economist from INSEAD, and Ugo Panizza, a public finance expert at the Graduate Institute, delve into the pressing issue of U.S. debt sustainability. They discuss the staggering current debt levels and rising interest costs, warning of the implications of recent policies like the One Big Beautiful Bill Act. As they analyze the potential effects of inflation and the challenges of raising revenues through tax increases, they emphasize the urgent need for timely action to prevent future fiscal crises.
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Persistent Upward Debt Drift
- U.S. debt has been rising steadily and is not an outlier among high-income countries, but it lacks episodes of clear stabilization.
- That constant upward drift makes the U.S. trajectory more concerning than some peers that sometimes reduce debt.
Interest Costs Are Growing Fast
- Interest payments already cost about 3% of GDP and were forecast to rise to 4–6% in coming decades.
- Rising interest burdens would make the current debt trajectory clearly unsustainable.
Sovereign Rating Symbolism Matters
- All three main rating agencies now rate the U.S. below the top tier, removing a long-standing AAA perception.
- Losing the highest credit rating is symbolically striking for the world's usual safe asset.
