Trump's 'Big Beautiful' Bill Trims Deficit Slightly But Keeps Borrowing On 'Much Steeper' World War II-Era Trajectory, Says Goldman Sachs

Goldman Sachs says President Donald Trump's "Big, Beautiful" spending-and-tariff plan would do little to slow a debt load already racing toward levels last seen at the end of World War II, warning that interest costs alone will top $1 trillion next year.

In a note to clients, Goldman Sachs economists Manuel Abecasis, David Mericle, and Alec Phillips stated that the bill slightly reduces the primary deficit but leaves overall borrowing "on much steeper trajectories," reported Fortune.

"The debt-to-GDP ratio is approaching the post-WWII high, and much higher real interest rates have put debt and interest expense … on much steeper trajectories than appeared likely last cycle," they wrote. Public debt already equals roughly 120% of GDP, according to the U.S. Treasury.

The Committee for a Responsible Federal Budget projects Washington will spend more servicing debt in 2026 than on Medicare or the Pentagon — $1 trillion a year, second only to Social Security. Goldman says that pace could force a historic austerity drive if Congress waits too long to cut spending or raise taxes.

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Why It Matters: Elevated Treasury yields, held near 4.4% as investors brace for higher-for-longer Fed policy, compound the burden.

The Congressional Budget Office estimates the House-passed bill, which extends most 2017 tax cuts, would widen deficits to $2.9 trillion over 10 years. Treasury Secretary Scott Bessent calls it a “spending problem” and not a “revenue problem,” but Goldman's team counters that stabilizing debt "would require running persistent fiscal surpluses of a size seldom sustained historically.”

Failure to act, they added, risks leaving future lawmakers only unpalatable choices. These include painful spending cuts, sweeping tax hikes, or printing money — an approach that once led Germany's Weimar Republic to ruinous hyperinflation after the first World War.

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