The national debt in the United States stands at 36.2 trillion dollars. The current U.S. administration wants to double defence spending, or roughly 2 Trillion dollars a year. Right now, the national debt is increasing by about 1 Trillion dollars every hundred days.
In fiscal 2024, roughly 14% of the annual budget went directly towards servicing the national debt, and at the present time the national debt to GDP ratio is roughly at 123%. It is estimated by economists that somewhere between 180% and 200% of GDP, the budget is unsustainable.
In Trump’s first iteration as President, he added 8.4 trillion dollars to the national debt in just four years. If Trump adds the same level of debt to the national debt in his second term he will increase the national debt by more than 23%.
It has been estimated taxfoundation.org that American tariffs on China, Mexico and Canada will result in the loss of 1.44 million U.S. jobs and an additional increase in combined lost taxation revenue due to job losses and increased taxes of approximately 1.2 Trillion dollars U.S.
While it is impossible to determine the impacts definitively over the next four years, it is possible to foresee the national debt ratio to GDP rise substantively, closer to between 150% to 160% of GDP. At somewhere around 50 Trillion dollars of national debt, that would mean that servicing the debt as part of the annual U.S. federal budget would chew up 28% of the federal budget.
At what point does this become unworkable without adding substantive taxes, reduced services, more expensive health care, and reduced pensions and a reduced safety net?
Trump’s plan to decrease taxes substantively, while increasing military spending will lead America into an economic disaster, even before America becomes embroiled in any war with a variety of nations that Trump is already aggressive towards.
Can you imagine how much a war with Iran, Russia or China would cost?
I would suggest that if Trump continues to create enemies to the U.S. at the present rate, America will either lose all international and geopolitical influence as it seeks isolationism and further protectionist goals or it will become embroiled in a foreign war within his term in office.
Trump’s actions in less than a week have already degraded America’s geopolitical influence. As more western nations decide to leave America’s sphere of influence, threats will simply backfire. America under Trump is in for a crude awakening with respect to its foreign relations.
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