Staggering debt is common among global economic powers: Why Washington’s $40 trillion debt is different

The United States’s national debt surpassed $40 trillion last month, marking a grim milestone for the richest country in the world. But a stream of other major economies have a similar debt-to-GDP ratio, provoking the question: Does Washington’s debt crisis really matter? The total government gross debt-to-GDP ratio in the U.S. is 125.8%, according to the International Monetary Fund’s tracker. France’s is 118%, Canada’s is 110%, China’s stands at 106%, and the United Kingdom’s is 103%. Fiscal experts told the Washington Examiner that the United States is in a stronger position to handle staggering debt than other countries for a variety of reasons, but warned that Washington’s financial trajectory is ultimately unsustainable. What puts the U.S. in a stronger position? The U.S. is different than countries such as France, Great Britain, and Canada because its economy is bigger and healthier, Dr. Allen Mendenhall said. The world relies on the dollar as the dominant global reserve currency, and Washington’s debt “is really important in global financial markets,” said Mendenhall, who is a senior adviser for the Free Enterprise Initiative at The Heritage Foundation.“The GDP of California, New York, and Texas — those three states all have a larger GDP than Canada, and then Florida is not all that far behind Canada. So you’re talking like four of our 50 states are almost as economically powerful as all of Canada,” Mendenhall said. “So clearly, our economy is in a better position to handle debt than Canada is.”Adam Michel, the director of tax policy studies at the Cato Institute, said the capitalist underpinnings of Washington’s economic model have helped set the U.S. apart from other countries, giving it a “longer runway before the whole house of cards falls apart.” The free-market economy has fostered innovation that other countries rely on, created a degree of flexibility for reforms during crises, and helped the U.S. dollar become the leading global reserve currency, he suggested. The model has allowed the U.S. to be in a position where it can take on “more debt for longer before it all collapses.”“Because the United States has historically had relatively low taxes, a smaller government, a less burdensome regulatory state, and more raw innovation and risk-taking than basically any other country in the world, that has allowed the U.S. government to sustain what otherwise would be an unsustainable fiscal policy,” he said. “International debt markets are sort of like a beauty contest,” Michel added. “If I’m an investor that wants to buy government debt, the U.S. is still, relative to all of the other options around the world, not a terrible bet. Like if I’m choosing between putting my money in Chinese debt, or Greek debt, or Italian debt, or U.S. debt, there’s still like more productive economic activity in the U.S. that could potentially sustain this and a functioning political system … we’re sort of the least ugly of all the ugly ducklings out there.”Can Washington grow the economy out of the crisis? The $40 trillion debt milestone Washington reached in August marked the first time since World War II that the federal government’s debt grew to the size of the entire U.S. economy.To a certain extent, an economy like the U.S. can grow itself out of heavy debt, Medenhall said, pointing to how Washington did just that following World War II. But he warned against banking on the same scenario in the modern era. While the workforce boomed with returning soldiers and families exploded after WWII, birth rates are down in the U.S. in 2026 as the country faces an aging population, a devastating indicator for long-term economic growth, Mendenhall noted. “It’s just a different situation. It’s harder to grow just naturally under those conditions. Not that it can’t. It’s just that it’s harder to,” he said.Michel agreed that the U.S. is in a fundamentally different place than in the 1940s, noting that the underlying reasons for the debt were also very different. In that era, debt was spurred by the war, naturally fading to an extent with the conflict’s end and in the blush of post-war population growth and labor-sector expansion. That contrasts with today, where one of the major underlying causes of the current debt crisis, entitlement spending, will only worsen if the economy were to grow, he warned. “We cannot grow our way out of our debt and deficit problem because our debt growth is driven almost exclusively by healthcare spending and Social Security spending on old-age pensions, and both of those programs we spend more on the wealthier we are,” Michel said. “On healthcare, people consume more healthcare services when they are wealthier, and so we should expect that to continue if we have more growth. And Social Security is indexed to wage growth, so the extent that productivity boosts wages, the fiscal burden of Social Security will also continue to grow.” What role does AI play? The growth of artificial intelligence, which can be used to scale productivity, is one bright light that Mendenhall suggested could contribute to the push to grow the economy out of the debt crisis. He called “the increase in the production of knowledge” a “useful” development in terms of spurring positive economic outcomes. “Not all the numbers we’ve seen have been positive this year, in terms of if you look at the different jobs reports and inflation numbers and other things that are out there, you know, there are some numbers that aren’t great, but the numbers that are good — a lot of them linked to AI,” Mendenhall said. “It increases the productivity of each individual worker for people to use it, you know, whether you’re an accountant or a lawyer or whatever,” he said. Some experts believe AI accounted for a third of economic growth in 2026. Michel agreed that AI would be a “big positive” for net GDP and feed into higher economic growth. But he warned that technological advancement alone is not sufficient to fix the budget problem, due to Washington’s approach to entitlement spending on Medicare, Medicaid, and Social Security. The heart of the debt crisis: Entitlement spending The U.S.’s approach to healthcare is one critical way that Michel suggested its debt crisis differs from those of some other major economies. Whereas some countries simply limit services such as healthcare with certain controls and are able to keep such spending as a smaller percentage of their budget, the U.S. expands entitlement spending on items like Medicare, Medicaid, and Social Security to keep people covered, systematically expanding the amount of spending Washington is approving and deepening the debt crisis. Washington’s allocations for Medicare and Medicaid accounted for around 11% of the federal budget in 1990, compared to roughly 24% in 2025. “The share of debt to GDP is not what is necessarily concerning … If you look across Europe or the OECD, many of those countries, but not all of them, have debt levels that are, as a share of GDP, similar to ours,” he said. “What is really concerning for investors for the sustainability of that debt is future projections — is that over the next 10 years, 20 years, if no political intervention is made, how much worse do things get? And the United States is at the top end of the list of countries that have all of these autopilot programs that are expected to just balloon out of control going into the future.” “These autopilot programs that aren’t regularly assessed or changed by Congress, and if Congress does nothing, they just sort of grow automatically faster than GDP, faster than population, and faster than inflation,” he added. “The United States is unique in the fact that we have so much of the budget is just on autopilot and projected to grow and grow.” Mandatory spending refers to programs governed by provisions of permanent law that are essentially automatically renewed each year. Mandatory spending and interest the government pays on the national debt accounted for 75% of the government budget last year. Entitlement spending on Social Security, Medicaid, and Medicare accounted for over 75% of mandatory spending. Michel named two options for tackling the entitlement issue and targeting the debt in the U.S. One would be going the route of places like Canada or the United Kingdom, where the government is in charge of healthcare, thus holding the ability to ration care and tighten spending. That could mean longer waitlists for people, particularly non-emergency care — such as specialist appointments and elective surgeries — as the mechanism to control demand, he said. In places like Canada or the United Kingdom, patients’ main hurdle for healthcare is a waitlist based on the urgency of their condition, because care is publicly funded and resources are capped. The median waiting time for non-urgent hospital treatment in Great Britain is 11.9 weeks. A 2023 Commonwealth Fund survey found 40% of U.S. adults who needed nonemergency surgery waited under four weeks for treatment.” Or the government could return more power to the private sector, Michel said, taking the burden of healthcare spending off of Washington. “You could say the government is going to sort of put your share of healthcare spending into an account, and everyone, and then you get to choose what you spend on it and how much,” he said. “That puts the consumer back in the driver’s seat, or you could just stop the government program and let people save and purchase their own services on their own.” ‘WE HAVE WORK TO DO’: WARSH SAYS INFLATION IS FED’S MAIN FOCUSWhatever the solution, Washington’s approach to the debt crisis isn’t going to shift unless something deeper changes, stirring lawmakers to action, experts warned. “Until the American people care about the size and scope of government, the accumulation of debt, the risk of fiscal crisis, we’re going to continue to kick the can down the road,” Michel said.