America’s Fiscal Alarm: Fitch, Congress, and Bessent Weigh Growth Against Debt

Fitch Ratings and Congress are raising urgent concerns about the United States’ rising debt and persistent deficits. Fitch projects the federal deficit will stay at 7.1% of GDP in 2025 and rise to 7.6% in 2026.

The U.S. debt-to-GDP ratio could reach 120% next year and 135% by 2029. Congress debates whether to extend the 2017 tax cuts, which could add over $3 trillion to the debt in the next decade.

Lawmakers warn that without real reforms, the country faces higher borrowing costs and less flexibility to respond to crises. U.S. Treasury Secretary Scott Bessent offers a different outlook.

He repeatedly states that the U.S. can achieve economic growth above 3% by late 2025. Bessent bases this on a “three-legged stool” strategy: making the 2017 tax cuts permanent, expanding deregulation, and using tariffs to generate hundreds of billions in revenue.

He expects deregulation to boost productivity, especially in energy and artificial intelligence. He points to new trade talks with 18 partners, including a deal with the UK and a temporary pause with China.

Bessent acknowledges that deficit reduction remains a priority. He targets a 3% deficit by 2028, down from the 6.5–7% projected for 2026. His plan relies on tariff revenue, drug pricing reforms, and government efficiency.

He also highlights IRS modernization and a review of tax-exempt status for large institutions. However, Bessent admits that legal challenges and political resistance could slow progress.

He downplays recent bond market volatility, noting that U.S. Treasury yields have actually fallen since January 2025, and attributes market swings to leveraged trading rather than U.S. policy.

Despite Bessent’s optimism, Fitch and many in Congress remain skeptical. They argue that without significant changes to mandatory spending programs like Social Security and Medicare, the debt will keep rising.

High government borrowing could push up interest rates, making it harder for businesses and families to get loans. If investors lose confidence, the U.S. could face even higher borrowing costs.

This debate matters for everyone. The government’s fiscal path affects the value of the dollar, interest rates, and the stability of the economy.

Fitch and Congress warn of growing risks, while Bessent bets on growth and efficiency to pull the country through. The outcome will shape America’s economic future for years to come.