Rising Deficits Under Trump Set to Push Debt Above 140% of GDP
The United States is on track to exceed the debt levels of Italy and Greece by the end of the decade, according to new forecasts from the International Monetary Fund (IMF). The surge, driven by sweeping tax cuts and a sharp rise in defense spending under President Donald Trump, could see U.S. debt hit 143% of GDP by 2030.
By comparison, the IMF expects Italy’s debt ratio to remain stable at about 137%, while Greece is projected to lower its debt-to-GDP ratio from 146% to 130% over the same period. The figures highlight the divergent fiscal paths of major economies since the 2008 financial crisis and the Covid-19 pandemic.
The U.S. debt-to-GDP ratio currently stands at roughly 125%, but sustained annual deficits—projected to remain above 7% of GDP—are expected to accelerate borrowing sharply over the next five years. In contrast, Italy’s deficit is forecast to fall below the European Union’s 3% cap as early as this year.
Tax Cuts and Defense Spending Drive U.S. Borrowing Surge
The IMF report attributes much of the fiscal deterioration in Washington to the Trump administration’s “big, beautiful bill”—a package of extensive tax cuts and spending increases passed by Congress earlier this year. The measures have widened the budget gap while boosting disposable income for middle- and upper-income households.
Trump has also pledged to build a “golden dome” missile defense shield, estimated to cost nearly $1 trillion, alongside broader increases in military spending. These policies could expand the federal deficit by an additional $7 trillion annually by the time Trump leaves office in 2029.
The reversal of deficit-control measures introduced under the Biden administration has raised concerns about long-term fiscal sustainability. “Reaching a debt-to-GDP ratio above 140% would make the U.S. one of the most indebted major economies in the world,” the IMF warned.
Europe’s Tightening Contrasts with U.S. Expansion
While the U.S. ramps up borrowing, both Italy and Greece are maintaining tighter fiscal discipline. Rome’s government has committed to achieving a primary surplus—where revenues exceed non-interest spending—by cutting expenditures and stabilizing debt levels. Greece, once at the epicenter of the eurozone crisis, has reduced its debt load significantly since peaking above 210% of GDP in 2020.
Economists say Italy’s fiscal progress remains fragile due to low growth, a shrinking population, and ongoing emigration. “The economy and public finances remain vulnerable to a sudden negative shift in the global scenario,” said Lorenzo Codogno, a former chief economist at Italy’s Treasury. He noted that pressure is mounting on Prime Minister Giorgia Meloni to boost defense spending in response to Trump’s tariff threats and calls for greater European military contributions.
Global Economists Sound the Alarm
Analysts warn that the projected U.S. debt surge could have symbolic and financial implications. Mahmood Pradhan of the Amundi Investment Institute described it as “a symbolic moment,” noting that the Congressional Budget Office expects debt to continue rising due to “perpetual deficits.”
However, Pradhan added that Italy’s weaker growth outlook could still leave it economically exposed despite its improving fiscal position. James Knightley, chief international economist at ING, said the data underscores an ironic shift: “Many U.S. politicians and investors look down on Europe’s slow growth, but with metrics like these, the conversation changes.”
As the decade progresses, the IMF expects fiscal contrasts to widen between the U.S. and Europe, with Washington relying increasingly on debt to fund its ambitions. The long-term challenge, analysts warn, is whether the world’s largest economy can sustain such borrowing without undermining global confidence in the dollar.
