Among Wall Street, retail investors, Ivy League economists and Washington policymakers, you’d be hard-pressed to find anyone who isn’t nervous about the burden of the U.S. national debt. They worry that confidence in bond markets will one day wane, when buyers of U.S. borrowings question whether Uncle Sam can really repay the debt.
Goldman Sachs CEO David Solomon is among those concerned about the U.S.’s $38 trillion national debt, joining JPMorgan Chase CEO Jamie Dimon, Federal Reserve Chairman Jerome Powell, Bridgewater Associates founder Ray Dalio and Capitol Hill politicians.
Indeed, like his peers, Solomon isn’t necessarily worried about the value of the debt the U.S. has accumulated, Rather, its debt-to-GDP ratio. This barometer indicates to the market the amount of rising debt in the United States in relation to the rate of its economic growth, and thus its ability to repay its loans. This balance is currently about 125%, but is expected to reach 156% by 2055, according to Treasury data. According to data from the Congressional Budget Office (CBO).
The debt-to-GDP balance presents two options for lowering the baseline: either cutting spending or growing the economy. The latter is considered by many to be preferable, but may be an optimistic option that fails to address the problem of fiscal overextension.
Solomon said that in the current environment, with artificial intelligence expected to propel Wall Street to new highs, growth options are looking increasingly realistic. speak at the meeting economic club of washington d.c. Last week, the banking giant said: “The way out is a growth path. When dealing with this, the difference between 3% and 2% compound growth is huge, so there’s a lot of talk about running… a real growth platform.”
“I think we have some things that will provide us with a better opportunity for a higher growth trajectory, particularly … the integration of technology, artificial intelligence into the business and the productivity opportunities that come from that,” he continued. “But if we continue on our current course and don’t increase our growth levels, there will be a reckoning.”
Based on the latest data, Solomon has reason to be hopeful. according to Latest estimates from the Bureau of Economic Analysis (Last shared on September 25, as no new releases were shared during the government shutdown) Second quarter GDP growth was 3.8%.
embedded behavior
Solomon, who has led Goldman Sachs since 2018, added that the national debt does not necessarily become a “crisis.” That said, he did say that many of his contacts in the business community are concerned about debt levels and the behavior that now seems to have become the norm.
“I think people are worried about… the fact that we’ve reached a point – and this is true in the United States, by the way, but also in every other advanced economy -… that fiscal stimulus and aggressive fiscal policy are actually baked into the way these democratic economies operate, and it’s accelerated significantly over the last five years,” he added.
Since President Donald Trump returned to the Oval Office, economists have highlighted the government’s unusual approach to rebalancing its books. While chief among them is raising revenue through tariffs, Trump has also proposed raising money to pay down the national debt through a “Gold Card” visa program that would charge wealthy immigrants $5 million for the privilege of a green card “and a path to citizenship.”
The president said in February that he believed he could avoid a potential debt crisis entirely with gold cards, saying: “A million cards are worth $5 trillion, and if you sell 10 million cards, that’s a total of $50 trillion. Well, we have $35 trillion in debt, so that’s good.”
He noted that if he could sell 10 million cards, he would be “left with” $15 trillion, adding: “That may be earmarked for deficit reduction, but it could actually be more than that.”