The U.S. national debt has reached a scale that is actively weakening the foundations of the American Dream and could amplify the severity of the next downturn, according to a senior fiscal policy economist. With federal debt now standing at roughly $38.5 trillion, the cost of servicing that burden is increasingly shaping everyday economic realities for American households.
Housing affordability, access to education, and the rising cost of retirement have all been cited as reasons the American Dream feels less attainable. President Donald Trump has recently focused on housing supply, proposing limits on large institutional investors buying single family homes. JPMorgan Chase chief executive Jamie Dimon has argued that education and skills training also play a central role in restoring opportunity.
Yet for Kurt Couchman, senior fellow in fiscal policy at Americans for Prosperity, these pressures share a common source. In his view, many of today’s affordability challenges trace back to the rapid growth of federal spending and debt, particularly since the pandemic.
Debt, Inflation, and Fewer Opportunities
During the final quarter of 2025 alone, the U.S. government spent an estimated $276 billion on interest payments. That figure, Couchman argues, represents money that cannot be directed toward infrastructure, education, or other investments that support long term growth. Similar warnings have been voiced by investors such as Ray Dalio, who has cautioned that rising interest costs could eventually crowd out productive public spending.
Couchman testified before a House Judiciary subcommittee late last year that growing debt raises the risk of a bond market shock with far reaching consequences. In a subsequent interview, he said the inflation surge experienced since 2021 reflected an “explosion” in the money supply combined with deficit spending.
International institutions including the International Monetary Fund and the World Bank have repeatedly noted that once a country’s debt burden surpasses certain thresholds relative to GDP, economic growth tends to slow. Slower growth, Couchman said, translates directly into fewer well paying jobs and weaker productivity gains.
Why the Debt to GDP Ratio Matters
Most economists agree that government debt itself is not inherently harmful. U.S. Treasuries underpin global financial markets and provide a benchmark for pricing risk worldwide. The concern lies in the debt to GDP ratio, which measures how fast obligations are growing relative to the economy’s ability to support them.
As interest payments rise, a larger share of federal revenue is diverted toward servicing past borrowing. That leaves less fiscal room to respond to future shocks, whether economic, geopolitical, or environmental. Over time, the drag on productivity can compound, making it harder for incomes to rise in real terms.
Could a Debt Crisis Trigger a Depression?
The most severe scenario, Couchman argues, would be a loss of confidence in U.S. government debt. In such a case, Washington could face sharply higher borrowing costs, forced spending cuts, or pressure to expand the money supply, risking another wave of inflation.
“If that happens,” he warned, “the likelihood of a recession, if not a severe recession or even a depression, becomes real.” Beyond economics, he added that prolonged instability could strain political institutions and global security arrangements.
Some analysts counter that the United States, as the issuer of the world’s reserve currency, is effectively too large to face a classic debt crisis. Couchman acknowledges that recessions are a normal part of the economic cycle, but he believes the country can still avoid a more damaging outcome by acting before debt dynamics worsen further.
Transparency Over Easy Answers
There is no politically painless solution to America’s fiscal imbalance. Cutting spending, raising taxes, or enforcing strict budget rules all carry electoral risks. As a result, responsibility is often deferred from one administration to the next.
Couchman’s proposal centers less on ideology and more on process. He argues that Congress should adopt a fully transparent budgeting system that clearly accounts for all spending and revenue, allowing lawmakers and the public to understand trade offs. He has pointed to historical calls for fiscal clarity, arguing that informed debate is a prerequisite for sustainable reform.
Without such changes, he warns, the rising U.S. national debt American Dream may continue to drift further out of reach, not through a single crisis, but through years of slower growth and diminished opportunity.
