The International Monetary Fund (IMF) warned on the 27th (local time) that U.S. national liability could surpass the levels of Italy and Greece, once labeled "fiscal problem children." Coincidentally, the warning came amid a "shutdown" in which U.S. federal government operations were paralyzed after politicians failed to reach a budget deal. In the United States, the Supplemental Nutrition Assistance Program (SNAP), which provided food aid to 42 million low-income people, is set to be suspended starting on the 1st of next month due to the shutdown. A problem long regarded as a "theoretical crisis" has emerged as a "real fear" directly hitting American society, observers said.
On the 27th, the IMF projected in its latest outlook that the U.S. government liability-to-gross domestic product (GDP) ratio will reach 143.4% in 2030. That is a surge of nearly 20 percentage points in five years from the current 125% level (based on fiscal year 2025). Over the same period, Italy's liability ratio is expected to remain around 137%. Greece is forecast to fall from 146% to 130%. Italy and Greece were Europe's fiscal problem children, pushed to the brink of default during the 2010 financial crisis. This would be the first time U.S. national liability surpasses those countries since 1946, right after World War II, when a massive amount of Government Bonds was issued to fund war expenses.
U.S. national liability has already exceeded $38 trillion (about 5경 3000조 won) as of this month. The fiscal deficit for the 2025 fiscal year alone amounts to $1.8 trillion (about 2500조 won). The IMF expected the United States to run fiscal deficits exceeding 7% of GDP every year through 2030. That is the highest level among advanced economies.
It is not just the size of the borrowing that is a problem. As liability rises, interest expenses have also surged explosively. According to the U.S. Treasury Department, the average interest rate on federal government liability jumped more than twofold from 1.556% in January 2022 to 3.36% in September this year. Based on last month's rates, the U.S. government's annual interest expenditure amounts to $1.216 trillion (about 1700조 won). That is a massive sum accounting for 17% of total federal spending. Interest expenses have already far surpassed the defense budget ($850 billion).
The bigger fear is that there is little sign the national liability problem will be resolved even after 2030. The Committee for a Responsible Federal Budget (CRFB), analyzing the Congressional Budget Office (CBO) long-term outlook, projected that U.S. national liability will reach 156% of GDP by 2055. That means a deterioration of 13 percentage points in 25 years from 143% in 2030. It warned in particular that starting in 2045, the liability interest rate could surpass the economic growth rate, triggering a "debt spiral." It means falling into a vicious cycle where borrowing begets more borrowing.
Experts said both the ruling Republicans and Democrats have responded irresponsibly to the rise in liability. President Trump approved large-scale expenditures through the "One Big Beautiful Bill," which passed Congress this summer. The bill included an extension of the Republican tax cut introduced in 2017. The Congressional Budget Office analyzed that the bill would add $3.4 trillion (about 4700조 won) in deficits over the next 10 years. In addition, increased defense expenditure—such as boosting the Immigration and Customs Enforcement (ICE) budget to fund large-scale deportation operations and building a $1 trillion "golden dome" shield—was also cited as a driver of the liability surge.
Researcher Joe Gagnon at the Peterson Institute for International Economics said, "Democrats don't want spending cuts, and Republicans don't want tax increases," pointing to the political gridlock. The ongoing shutdown is the catastrophic result of this stalemate. Global investor Ray Dalio criticized the Inflation Reduction Act (IRA) and the CHIPS Act, which former President Joe Biden led, as "irresponsible and excessive measures that released far more money than necessary."
Leading scholars sounded warnings in unison. Kenneth Rogoff, a Harvard University professor who warned of the 2008 financial crisis, said, "I have never warned of a U.S. fiscal crisis until now, but that is no longer the case," reversing his stance. He projected, "Within the next four to five years, the United States could face a situation where it cannot handle its liability." The United States has far greater borrowing capacity than European countries thanks to its status as the issuer of the key currency. But unlike Italy, where credit ratings are rising due to fiscal consolidation efforts, the symbolism of the United States going in the opposite direction cannot be ignored. James Knightley, chief international economist at ING, said, "U.S. politicians and investors used to dismiss Europe, but when numbers like these come out, the conversation changes."
The liability crisis is directly tied to dollar hegemony. President Trump is publicly pressuring the Federal Reserve to cut interest rates. Experts said that the more the United States imposes tough financial sanctions on countries such as Iran and Russia, the more likely nations like China are to further reduce their reliance on the dollar.
Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, likened the current situation to an "economic heart attack" in the United States and assessed that the country is at the tail end of a massive "liability cycle." He said the dollar could follow the path of the Dutch guilder and British pound as the British Empire declined. He said, "The likelihood of the United States going bankrupt is low (because it can print dollars), but it will repay its borrowing with dollars that have lost value," effectively signaling a loss of purchasing power. The Peter G. Peterson Foundation warned, "The three downgrades of the United States' credit rating should be a wake-up call to leaders," adding, "If the course is not changed, its status as the key currency could be at risk."