Wharton professor Joao Gomes has expressed concern over the rapid growth of U.S. debt. He predicts that if Congress does not take immediate action, the U.S. could face a debt crisis by 2025.
What Happened: Gomes compared the situation with the UK’s 2022 financial crisis. He suggested the U.S. could meet a similar fate if the current fiscal trajectory is unchanged. Gomes discussed this in an interview with CNBC’s ‘Squawk Box’.
“That’s something that could definitely happen to us next year,” Gomes said.
The professor warned that rising interest rates make a default crisis in the U.S. within this century increasingly likely.
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Gomes also pointed out the 2017 tax cuts, which expire next year, as a potential area of dispute. The future of this program is largely dependent on the upcoming presidential election, with neither candidate indicating specific plans to address the fiscal issue.
“I think we’ll have a serious debate next year about the tax cuts and whether to extend them or not,” he said. “And I think we just can’t afford them.”
Other experts, such as Responsible Federal Budget president Maya MacGuineas and Wall Street figures Jamie Dimon and Ken Griffin, have also expressed concern about the size of U.S. borrowing. They suggest a solution would require both tax increases and spending cuts.
Why It Matters: The U.S. national debt has been a growing concern for many. A study revealed that over 85% of Americans are deeply worried about the potential impact of the burgeoning national debt on their future.
Similarly, Bill Gross, co-founder of PIMCO, warned of a significant escalation in the U.S. debt crisis, comparing its future implications to climate change’s slow yet destructive effects.
As the national debt drama deepens, the U.S. government debt is reaching unsustainable levels, with the latest analysis pointing to an even more concerning future.
The debt has been increasing by nearly $8.5 billion per day over the past year, further emphasizing the situation’s urgency.
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