Expert Warns US Debt Crisis Might Have Already Begun

According to Financial Times journalist Robin Wigglesworth, the US debt crisis may already have begun, unfolding gradually rather than through a sudden collapse in the bond market. His caution arrives alongside figures showing US debt servicing costs reached a record $1.1 trillion for fiscal 2026. Rather than triggering an immediate default, the national debt crisis is progressively straining the federal budget in a slow and intensifying squeeze.

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US Debt Crisis, Rising Interest Costs And A Slow Economic Squeeze

Wigglesworth, author of A Fabulous Debt, mentioned during an appearance on The Long View podcast that his concern over the US debt situation has grown, though he remains less worried than many others.

Robin Wigglesworth stated:

“I think the US is maybe in the early stages of what I’d call a chronic debt crisis. It’s just very slow, very gradual.”

Why US Debt Servicing Costs Keep Climbing

A significant factor is refinancing: Treasury securities originally issued at rates between 1% and 3% are now being rolled over at rates reaching up to 6%, while the federal budget remains far from balanced. The Committee for a Responsible Federal Budget (CRFB) estimates that interest payments hit a record $1.1 trillion in fiscal 2026, amounting to 3.4% of GDP—surpassing expenditures for defense or Medicare. This bill serves as a clear indicator of the current debt crisis, with servicing expenses continuing upward. Wigglesworth calculates his own current estimate at approximately 3.5% to 3.6% of GDP.

He further noted:

“And that is not great. And it is definitely going higher, but it still is another decade before it hits kind of 5%-ish.”

A Chronic Crisis, Not An Acute One

Many observers imagine the US national debt crisis concluding similarly to situations in Argentina or Greece, characterized by default followed by financial restructuring. Wigglesworth rejects that outcome for the United States.

He remarked:

“I don’t think that happens in a country like the United States that can literally print dollars.”

Wigglesworth also explained:

“This debt crisis doesn’t play out in hyperinflation, doesn’t play out in runaway bond yields. It plays out as debt eroding America’s financial health and being able to spend less on other stuff it wants to spend money on.”

Not everyone shares this measured outlook. With the 10-year Treasury yield exceeding 5%, CRFB President Maya MacGuineas issued a more urgent warning regarding the US debt crisis:

“A fiscal crisis, once unthinkable, is now a distinct possibility.”

What Venice Teaches About Government Debt

Historical roots for public debt extend far back. Wigglesworth’s book traces the origin of bonds to 1171, when Venice financed a military fleet through tradable loans offering a 5% annual return. Although Venice never paid back that principal, the Rialto market emerged as the world’s earliest bond marketplace.

Additionally, Scope Ratings issued its own evaluation this month, maintaining the US credit rating at AA- while projecting debt levels to approach 160% of GDP within ten years. Thus far, the 2026 debt situation has progressed as a slow grind, leaving Washington with fewer policy tools for the next economic downturn—a factor relevant to investors holding bonds, equities, or cryptocurrencies. Wigglesworth cautioned that while the national debt crisis might never trigger a sudden explosion, the ongoing effects could still prove quite painful.

Frequently Asked Questions

Is the US currently facing a debt crisis?

According to Financial Times journalist Robin Wigglesworth, the US may be in the early stages of a slow, chronic debt crisis rather than experiencing an acute market crash.

How much did US debt servicing costs reach in fiscal 2026?

US debt servicing costs hit a record $1.1 trillion in fiscal 2026, accounting for roughly 3.4% of GDP according to the Committee for a Responsible Federal Budget.

Why are US debt servicing costs increasing?

Costs are rising because older Treasuries issued at 1% to 3% interest are being rolled over at rates reaching up to 6%, alongside a budget that remains far from balanced.

Will the US default on its national debt like other countries?

Experts like Wigglesworth believe a sudden default similar to Argentina or Greece is unlikely because the United States can print its own dollars, meaning the crisis manifests as a gradual erosion of financial health rather than hyperinflation or default.

What does Scope Ratings project for future US debt?

Scope Ratings maintains the US at an AA- rating and projects that national debt could approach 160% of GDP within a decade.