The US national debt recently surpassed $37 trillion for the first time, with record-breaking growth rates. Multiple American media outlets have published analytical articles suggesting this indicates the US fiscal burden is rapidly increasing. Due to mounting taxpayer cost pressures, US national debt is heading toward a vicious cycle.

Why does the United States face the risk of soaring debt? Because Washington has planted a "time bomb" - the "Make America Great" tax and spending bill that has already been signed into law. This enacted legislation centers on tax cuts, spending expansion, and debt ceiling adjustments, marking a major turning point in US fiscal policy. While the bill may consolidate the Trump administration's political foundation by stimulating economic growth in the short term, it will also trigger major challenges including uncontrolled debt scale and dollar credit overdraft.

From the realistic picture of fiscal deficits and debt expansion, first, the United States will face continued escalation of fiscal deficits and further breakthroughs of the debt ceiling. According to analysis by the Congressional Budget Office (CBO), after the bill's implementation, federal fiscal deficit scale will significantly expand over the next decade, with incremental increases potentially reaching hundreds of billions of dollars. If some tax reduction policies continue beyond 2028, the deficit scale may expand further.

The reasons include: First, long-term solidification of existing tax reduction policies, including maintaining the highest marginal tax rate for personal income tax at 37% and permanently implementing accelerated depreciation policies for corporate investments. This item alone could bring hundreds of billions of dollars in deficit increases. Second, new phased tax reduction measures, such as exempting tips and overtime pay from federal income tax from 2026-2028 under income ceiling prerequisites, providing annual tax exemption quotas for seniors over 65, and expanding corporate facility depreciation scope. The cumulative new deficit over ten years amounts to hundreds of billions of dollars. Third, limited offsetting on the spending side. Through measures such as raising work requirements for Medicaid recipients, tightening food stamp distribution conditions, and canceling student loan preferential programs, spending will be reduced by over one trillion dollars over ten years combined, but this can only offset about 30% of the new deficit.

International rating agencies predict that the US debt-to-GDP ratio will rise to over 130% by 2029, far exceeding international warning lines.

Second, interest payment expansion and fiscal sustainability challenges. The Treasury Department's annual interest payments have already exceeded the trillion-dollar level. If debt scale continues to expand, interest costs could increase annually by hundreds of billions to trillions of dollars before 2030. Rising debt costs in a high interest rate environment will squeeze fiscal resources allocated to key areas such as public welfare and infrastructure.

Furthermore, historical lessons and international comparisons highlight the severity. The United States has historically maintained fiscal operations by raising the debt ceiling multiple times, but current debt expansion speed far exceeds economic growth potential. After the 2008 financial crisis, US federal debt scale increased from $10 trillion to $20 trillion, while economic output grew by about 30% during the same period. Currently, the annual debt growth rate is significantly higher than economic growth rates. International experience shows that when debt as a proportion of economic output exceeds 150%, debt service pressure will significantly intensify. Although the dollar temporarily alleviates crisis through "local currency" advantages, fiscal sustainability has approached a critical point in the long term.

Credit overdraft will accelerate de-dollarization. First, declining attractiveness of US debt exacerbates capital outflow concerns. The status of US Treasury bonds as global "safe haven assets" relies on their credit ratings and market liquidity. However, current fiscal expansion policies may weaken market confidence in US debt. As the attractiveness of US debt yields relative to assets such as gold and European bonds declines, international investors may turn to high-yield assets. Data shows that over the past decade, the proportion of overseas investors in publicly held US debt structure has declined year by year, with overall holdings dropping from 34% ten years ago to the current 29%.

Second, global spread of de-dollarization trends. Geopolitical conflicts and energy policy adjustments are accelerating the global de-dollarization process. Countries such as Russia and China have expanded local currency settlements in bilateral trade. Additionally, Washington's current policies of canceling clean energy subsidies and relaxing oil and gas extraction restrictions have triggered international criticism of America's climate policy regression, potentially weakening its influence in global climate governance and indirectly promoting other countries' reduced dependence on the dollar.

Third, exchange rate volatility brings chain reactions to global financial markets. Dollar credit crisis may trigger severe exchange rate fluctuations: dollar strengthening will push up emerging market financing costs and exacerbate debt pressure. For example, Sri Lanka's external debt as a proportion of GDP has approached 90% in recent years. If dollar interest rates rise further, its debt service pressure will significantly increase.

US debt risks have already produced chain reactions. On one hand, it falls into a "debt-inflation" vicious cycle. Fiscal expansion policies may push up inflation levels, forcing the Federal Reserve to maintain high interest rates to suppress prices, but high interest rates will increase borrowing costs for businesses and individuals, suppress investment and consumption, and drag down economic growth. If fiscal stimulus effects delay inflation decline, the Fed may be forced to postpone rate cuts or even passively raise rates, causing the economy to fall into a vicious cycle of "high debt-high interest rates-low growth."

On the other hand, social welfare cuts and widening wealth gaps are intensifying. Implementation of the "Make America Great" bill's cuts to social welfare such as Medicaid and food stamps may cause large numbers of low-income groups to lose protection, exacerbating social conflicts. The wealthiest families receive annual tax cuts exceeding ten thousand dollars, while small tax cuts for middle and low-income groups cannot compensate for welfare cut losses. This "policy tilt" may trigger American social dissatisfaction and further tear apart social consensus.