The United States joins the European debt club: Trump’s ‘big, beautiful bill’ could fuel a $38 trillion bill larger than Italy or Greece in terms of share of GDP.
For decades, American politicians and investors have derided the countries that gave birth to Western democracy – Italy and Greece – as examples of fiscal excess. Italy, with its revolving door governments, and Greece, with its bailouts and austerity hangovers. But now, it is their transatlantic descendant who signs the biggest checks.
According to new forecasts from the International Monetary Fund (IMF), U.S. debt – which recently topped $38 trillion – is expected to rise faster than almost all advanced economies, from about 125% of GDP today to about 143% by 2030. That would put the United States above Italy, whose debt is expected to be around 137% of the country’s GDP, and Greece, which is expected to fall to approximately 137% of the country’s GDP. 130%. For the first time in modern history, Washington may find itself borrowing more, relative to the size of its economy, than the very countries it once viewed as red flags.
The latest driver is President Donald Trump’s “One Big, Beautiful Bill Act.” Passed by Congress this summer, this sweeping legislation combines significant tax cuts with increased federal spending, including half a trillion for a “Golden Dome” missile shield project. Experts at the Bipartisan Policy Center estimate the bill will cost $4 trillion over the next ten years, with tax cuts making it harder to close the gap.
To be sure, Trump’s second-term policies are at the same spending levels as previous administrations. The nonpartisan Tax Policy Center estimates that the total amount of federal relief taken after the COVID-19 pandemic — much of which was the result of former President Biden’s policies — was $5 trillion, leading to deficits not seen outside of wartime. Even if many of these fiscal excesses were temporary, the Center notes, the United States will still pay the price for decades in the form of higher interest rates. The infrastructure bill passed during Biden’s term was also $1.2 trillion.
The Congressional Budget Office projects that the total national debt will exceed $38 trillion by 2029, a growth of about $7 trillion per year.
“Symbolic moment”
Meanwhile, the European economies that once defined fiscal chaos have stabilized. Italy, still struggling with weak growth and an aging population, brought its deficit below the 3% limit set by the European Union a year earlier than expected. Greece, which saw its debt rate exceed 200% during the Covid-19 crisis, reduced it by almost half thanks to spending controls and tax reforms. Both countries now run small primary surpluses, meaning they receive more than they spend, before interest payments.
“It’s a symbolic moment,” said Mahmood Pradhan, global head of macro at the Amundi Investment Institute. The Financial Times. “The United States is entering a period of persistent deficits, while Italy and Greece, after painful lessons, are living within their means.”
But this change may not last. Lorenzo Codogno, former chief economist at the Italian Treasury, said THE Tutor that Trump’s tariff escalations and demands for increased European defense budgets could prompt governments in Rome and Athens to loosen their belts, following a bad example.
“Public finances remain vulnerable to a sudden and negative change in the global scenario,” he said.
For now, though, the optics – and irony – are striking. “Many people in Washington have long looked down on Europe’s slow-growing economies,” said James Knightley, chief international economist at ING. The guardian. “But when the numbers look like this, the conversation changes.”
