Can the US grow its way out of debt? Don't bet on it: McGeever
SPY•The article argues that AI-driven growth is unlikely to resolve US debt pressures, citing a $40 trillion national debt, a $2 trillion annual deficit and tax revenues that may not keep pace with growth.
1. Growth and tax revenue
US economic growth is strong, with Atlanta Fed GDPNow estimating third-quarter real growth at an annualized 5.0%. But the article argues that low corporate tax rates and falling non-tariff tax revenue limit how much growth may improve federal finances. The Congressional Budget Office estimates net federal revenues will fall by almost $5 trillion over 2026-2035 under the One Big Beautiful Bill Act.
2. Jobs and AI
Monthly nonfarm payroll growth averaged 53,000 over the past two years and 41,000 over the past 12 months, compared with more than 200,000 a month in the mid-to-late 1990s. The article says AI could raise productivity while replacing some human activity, potentially reducing income and payroll tax revenue. Standard Chartered analysts estimate the AI boom could generate additional revenue equal to 0.6% of GDP relative to CBO baseline forecasts.
3. Debt outlook
The article says tax hikes are unlikely under the current administration and that a productivity boost may take years to appear in the data. House Budget Chairman Jodey Arrington said the US cannot simply grow its way out of a $2 trillion annual deficit and $40 trillion national debt.
