US Treasury Secretary Scott Bessent says the US needs to reverse the “scary” fiscal path that it’s on before it’s too late.
In an appearance before a House committee Tuesday morning focused on the White House’s 2026 budget requests, Bessent was asked by Congressman Chuck Edwards what it would look like if the US government’s debt levels became “unsustainable.”
Says Bessent,
“It would look like a sudden stop in the economy as the credit would disappear as markets would lose confidence. I’m committed to that not happening, and again, a tipping point in sustainability is very difficult to pinpoint, but what is not difficult to pinpoint is a trajectory, and the trajectory is unsustainable.
When and if the markets were to rebel against is very difficult to know. I think just as I talked about the warning track for the X-date, I think that it’s very important not to go on the warning track, and we got to get to the other side of this and start reducing the debt.
And the debt numbers are indeed scary, but Secretary Yellen and I both agree that it is the debt-to-GDP that is the important number so we are trying to both control the absolute level of debt, pay it down, but also grow the GDP.”
As of the end of 2024, the US’s debt-to-GDP ratio was 124%.
In the hearing, Bessent, a former partner at Soros Fund Management, also confirmed that he would not be in favor of the Federal Reserve introducing a central bank digital currency (CBDC).
“We believe that digital assets belong in the private sector, and my personal view is that having a CBDC is a sign of weakness, not strength. Because really, the reason, if there is a reserve manager, or a foreign central bank holds US dollars, then there is a wide variety of US assets they can invest in. You would create a CBDC just for ease of use because there are no good choices for underlying assets.”
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