The U.S. national debt surpassed $40 trillion, and economist Michael A. Peterson warned that the growing debt burden is effectively “stealing from our next generation.”
The warning comes as rising interest costs and persistent budget deficits put increasing pressure on the country’s long-term fiscal outlook. Peterson, CEO of the Peter G. Peterson Foundation, told FOX Business on Tuesday that the debt growth “is an urgent problem” and that “$40 trillion is enough stealing from our next generation and it’s time to act.” He also warned that the debt burden has a negative effect on the economy, wages, affordability and specific government programs.
Debt Burden Extends to Future Generations
Peterson said the federal government is effectively borrowing from the future by spending money now and passing the debt and interest costs to younger Americans.
“We’re basically taking $2 trillion from our future, we’re spending it now, and we’re saddling our kids and grandkids with $2 trillion of debt, plus all the interest on top of it,” Peterson said. He added that interest is the fastest-growing government program and is expected to double over the next 10 years.
The warning follows recent concerns about the growing federal debt and its impact on younger Americans. Former U.S. Ambassador Nikki Haley has warned that the country is leaving “an entire generation broke” as the debt approaches the $40 trillion milestone.
Social Security Faces 2032 Deadline
Peterson also pointed to Social Security as an immediate fiscal challenge. The program’s main trust fund is projected to be depleted in 2032. Without congressional action, beneficiaries could face an automatic 22% reduction in benefits.
A Penn Wharton Budget Model analysis has examined potential ways to address Social Security’s funding gap, finding that different approaches would create different tradeoffs for taxes, benefits, economic growth, wages and future generations.
Peterson said the Social Security deadline is approaching quickly and warned that failing to act would leave retirees facing automatic benefit cuts. “Obviously, that makes no sense, that’s benign neglect of our retirees here, and we need to get at it,” he said.
Deficits and Interest Costs Grow
The federal budget deficit is projected to exceed $2 trillion in fiscal 2026, while rising debt and interest costs are expected to put additional pressure on government finances. Social Security, Medicare and interest expenses are among the fastest-growing drivers of the deficit.
Peterson said policymakers have several options to address the debt, including changes to tax policy and government spending. He said the solutions are well-known and that the U.S. government has the ability to control its own budgetary policies and take steps to stabilize or reduce its deficits and debt.
The Peterson Foundation’s Solutions Initiative brought together seven think tanks across the political spectrum to develop approaches to stabilizing the national debt as a share of GDP. Peterson said the debt reached 100% of GDP this year for the first time since 1946 and is trending toward nearly 200% over the next 25 years. He said the debate comes down to how much revenue policymakers want to raise, how much spending they are willing to cut and what combination makes sense, adding that all seven plans stabilized the debt.
“The good news is there are many combinations, many opportunities right in front of us. We don’t need to reinvent the wheel, we just need to have some political courage to get started,” Peterson said.
“Of course, this feels politically dangerous because you might involve more taxes or less spending. But at the end of the day, I think Americans are ready for this solution because they know this isn’t sustainable, and it’s not good for their long-term future.”
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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