Billionaire entrepreneur Elon Musk is once again raising concerns regarding the U.S. fiscal outlook, warning of dire consequences as interest on Federal debt balloons to unsustainable levels.
What Happened: On Tuesday, in a post on X, Musk warned that the United States was teetering on the edge of “de facto bankruptcy” as federal debt surpasses $37 trillion, and interest payments on this debt now accounting for 25% of all tax revenue.
Quoting a post by popular X account, Wall Street Mav, Musk says that “if this continues,” then all tax revenues will eventually go toward servicing the national debt, with “nothing left for anything else.”
The quoted post highlights the gravity of the situation, stating that of the $5 trillion in total U.S. Government revenue, interest payments now account for $1.2 trillion, while the government continues to spend $7 trillion annually, resulting in persistent and ever-growing deficits.
Economist Peter Schiff responded to Musk’s post, saying that the U.S. is already bankrupt, and that it’s “just a matter of time before it’s obvious to our creditors.” Schiff then warns that following this, “interest rates will skyrocket to the point” where debt servicing costs will exceed total tax revenue.
“The Fed will unleash runaway inflation in an attempt to prevent that from happening,” Schiff said.
Musk, who until recently headed the Trump administration’s Department of Government Efficiency, or DOGE, called out the GOP’s Budget Reconciliation Bill, for its tax cuts and “massive, outrageous, pork-filled” spending package, referring to it as a “disgusting abomination.”
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