Trump prices will slow national debt growth, but will not reimburse him that experts

“The purpose of what I do is mainly to repay the debt, which will happen in very large quantities,” Trump told the media earlier this month. “But I think there is also a possibility that we take so much money that we could very well make a dividend to the people of America.”

The plan seems welcome, in theory. But there is only one problem. Currently, pricing income does not even cover the interest of debt – without reducing its overall size.

According to the Treasury data seen by FortuneThe interest accumulated on cash tickets in July only $ 38.1 billion. Add to these $ 13.9 billion in interest on treasury bonds, $ 2.85 billion on floating treasury rate tickets (FRN) and a total of $ 6.1 billion on assets of securities protected by treasury inflation (TIPS). The bill is enticing: the total amounts to $ 60.95 billion for the month.

On the other hand, the Treasury declarations show that the prices only reported $ 29.6 billion to compensate for it. An impressive figure, but still not enough to compete with interest payments.

Of course, the White House could reimburse part of its debt and reduce interest payments by deploying pricing income directly to the results. Governments have a number of ways to repay the debt, either by reimbursing matters of maturity instead of overthrowing them, or launching a buy -back program in order to withdraw bonds and reduce total debt in circulation.

It seems that the White House does not yet promulgate a plan for this last option. A provisional schedule of buyout operations for August 2025 shows that the Treasury intends to spend nearly $ 40 billion to buy various types of security and maturity ranges. However, compared to a similar schedule from August from last year, it represents $ 10 billion less than the Biden administration took into account.

For the future, if the Trump team intends to spend around $ 30 billion per month to compensate for the national debt, it would have accumulated a gargantuan payment of $ 360 billion over one year. This figure represents less than 1% of the American national debt, at the time of writing.

Of course, those who behave on a economic scale are not concerned about the concept of reimbursement of the national debt because a) The bond market is part of the economy, b) The United States could get out of any defect or debt crisis, and c) The nation controls its own fate because its central bank has the capacity to relieve the cost of the loan.

However, warnings come from some of the most important corners of the economy. In the private sector, the CEO of JPMorgan Chase, Jamie Dimon, believes that America fucks towards a predictable crisis; In the public sector, the president of the Fed, Jerome Powell, thinks that it is time to have a “conversation for adults” on debt.

And the president himself is clearly aware of the problem, pushing the efficiency and reduction of costs to reduce deficits. The only problem is that economists cannot really understand their mathematics.

The White House said Fortune: “The debt ratio to the GDP in America in fact decreased since President Trump took office – and as pro -commune policies of the administration of tax reductions, rapid deregulation, more efficient public spending and historic commercial transactions continue to take effect and the accelerations of American economic resurgence, that the ratio will continue to follow in the right direction.

“It is in addition to the record income that President Trump’s pricing policies cause the federal government and cooled inflation opening the way for interest rate reductions.”

Compensation, without reimbursement

According to Calculations by Professor Joao Gomes, President Trump’s pricing regime results in zero spending rather than improving the balance sheet.

Wharton’s finance and economy professor (at Alma Mater of President Trump, the University of Pennsylvania) estimates that pricing income will compensate for the costs of the “big and good law on the bill” – estimated by the Office budget of the Congress to add 3 billions of dollars to debt by 2030 – and is not going much further.

“They leave the image of similar national debt,” said Professor Gomes Fortune In an exclusive interview. “The idea that (the prices) will reimburse the national debt is of course considerably overestimation.”

That said, Professor Gomes said the prices are likely to have useful drag effects on the speed at which the American national debt accumulates. The White House said that it expects its bill to reduce the debt / GDP ratio that is 94% regarded at its current 121% position by increasing economic growth.

“There is no doubt that we pay the debt,” added Professor Gomes. “Each year, the government needs 1.8 billion of dollars new net loans, so that this number could drop, but before we have questions about reimbursement, we must first fill this gap – and 1.8 Billion is impossible to close … The best we can hope is that the prices are less quickly revealed.”

“The idea that in one way or another in the debt will decrease, we will start to buy things and so on and to reduce the debt in dollars is simply unimaginable. We will never have so much income.”

Professor Gomes was taken over by Dr. Desmond Lachman, a principal researcher at the American Enterprise Institute. He said Fortune In an exclusive interview: “(to Trump) say that he will perhaps raise $ 300 billion is a drop in the ocean compared to the amount of red ink they have. The country is on a really dangerous debt trajectory. ”

Market signals

The quantity of national debt of a problem is ultimately revealed to foreign investors and their confidence in the ability of the United States government to pay its bills. About 26% of the American debt is owned by foreign countries according to the board of directors, presenting significant problems if these investors decide to take off.

Dr. Lachman believes that even if President Trump can supervise prices like bringing jobs back or reimburse the debt to be more politically acceptable, investors will see through rhetoric. “The markets are not stupid. They can do arithmetic and understand that it is nonsense,” he said.

The former deputy director of the Department of Politicians and the Examination of the International Monetary Fund (IMF) added that continuous flight to gold (prices have increased by 27% in the past year) indicates that markets no longer consider US treasury bills as the ultimate security haven.

“People fear that this government will not be serious about economic policy,” said Dr. Lachman. “Trump can say what he likes. A comment, I think, is great, it is: one thing about bond markets is that they cannot be essential. On the bond market, money will just want to protect their money, they are not afraid to be intimidated by Trump if the figures do not add up.”

The point of view of Dr Lachman is the fact that the yields of the treasure have remained relatively flat in the past two years. The 10 year old is around 4.3% and was the same at the end of October 2022, while 30 years has dragged around 4.8% since 2023.

For this reason, Professor Gomes thinks that the market is not alarmed by the unorthodox methods of the Trump team to balance the debt. He said: “There are interesting and specific things about this subject that we have all noticed. For example, the news earlier this week that Nvidia will effectively give a 15% tax to the federal government for any export to China certainly brings an additional source of income to the government which will not be weak.”

“The ability of this president and this administration to find strange ways” to generate income can convince the markets of Trump 2.0’s sincerity as regards debt, Professor Gomes has added: “I am not sure to write this ability to continue to do things that I would not support, and I do not think (to be) great ideas, but at the end of the day.

And although there are two ends of the specter on which will end up paying the prices (at a Trump end, saying that it will be the foreign nations, at the other end of Goldman Sachs says that the majority of prices will be paid by American consumers), the administration proves that it can “extract income”.

“Everything you think of methods,” added Professor Gomes, “if it’s a problem, they can find ways to do so.”

A turning point?

The national debt is often described as a chicken game played by an administration and the next one, adding to the debt and risking risking the crisis instead of introducing a potentially unpopular policy to remedy it (austerity).

Trump’s unusual approach to the revenue generation should not be considered the end of this game, said Professor Gomes, but simply a delay in any account. “It seems clear that the (markets) suspect are policies, they are convinced that this will not happen at the moment,” said the economist. “We would need something, another event of a certain type – a serious war or conflict – things that really change paradigms” to provoke such a crisis, “he added.

The board of directors is not so convinced. “The debt crisis is there,” he said in a shared note with FortuneDescribing a six -step program to reduce the debt / GDP ratio to 70% within 20 years. This includes, among a range of ideas, the establishment of a bipartite committee for tax responsibility, the reform of the tax reform to increase income in a fair manner and develop a set of social security reforms.