US President Trump’s new budget bill adds $3 trillion to already massive debt, sparking concerns from economists and investors
US Debt Is Soaring — Again
As President Donald Trump signed the US “Big Beautiful Budget Bill” into law this week, the U.S. national debt climbed past $37 trillion — a record figure that’s prompting serious questions about America’s financial future.
The bill, which slashes taxes but boosts military and immigration spending, is projected to add at least $3 trillion more to the debt. Critics, including former Trump ally Elon Musk, have called it a “disgusting abomination.”
Falling Dollar and Rising Costs to Borrow
Concerns over U.S. borrowing are already showing up in financial markets:
- The U.S. dollar has dropped 10% against the pound and 15% against the euro this year.
- Investors are demanding higher interest rates on long-term U.S. loans.
- The yield curve has steepened, suggesting doubts about long-term U.S. financial health.
This is happening despite U.S. interest rates remaining higher than those in the UK and EU — which would normally boost the dollar.
Ray Dalio: “This Can’t Go On Forever”
Billionaire investor and hedge fund founder Ray Dalio believes U.S. borrowing has hit a critical juncture.
“If this is not dealt with now, the debts will build up to levels where they can’t be managed without great trauma.”
Dalio estimates the U.S. could soon be paying $10 trillion per year just in interest and debt repayments — a scenario he says could only be avoided by:
- Cutting spending
- Raising taxes
- Or both
What Happens If America Doesn’t Change Course?
Economists outline three possible — and alarming — outcomes if the debt continues growing unchecked:
- Austerity: Sharp cuts to government services or steep tax hikes.
- Money printing: The U.S. Federal Reserve could buy more debt, which may fuel inflation and widen inequality.
- Default: The most extreme scenario — the U.S. fails to pay back its debt. This would shake the global financial system to its core.
Is the Dollar in Real Danger?
While the risk of collapse is low for now, global confidence in the dollar is eroding.
Top economist Mohamed El-Erian told the BBC:
“The dollar is overweight and the world knows it… But it’s hard to move at scale, so there’s really very few places to go.”
He likened it to a “cleanest dirty shirt” — flawed but still the best option.
The Bigger Picture: Context Matters
To understand the scale of U.S. debt, consider this:
If you saved $1 million every day, it would take you 100,000 years to save $37 trillion.
Yet economists say a better way to view national debt is as a percentage of GDP (income):
- U.S. GDP = ~$25 trillion
- Debt = ~$37 trillion
- Debt-to-GDP ratio = ~148%
While high, it’s still lower than countries like Japan and Italy — and the U.S. still holds a unique advantage: a highly innovative, productive economy.
Final Thoughts: Dollar’s Status Not Guaranteed
The U.S. dollar has served as the world’s reserve currency for decades — but that status isn’t guaranteed forever.
In 1968, William F. Rickenbacker published Death of the Dollar warning of similar risks. He’s long gone — but the dollar remains.
Still, as borrowing grows and global competition rises, America may not be able to count on that dominance forever.
