The national debt just surpassed $40 trillion for the first time. Bank of America recently projected it will hit $50 trillion by 2029.
Anyone who has read these columns over the years will find this to be of little surprise. Beginning in 2019, I started keeping a tally for when the debt would hit $100 trillion, based on the nominal growth of the debt versus the nominal growth of the U.S. economy annually since 1980, then 8.8 percent and 5.4 percent, respectively.
Then, the projection was — once periodic wars and recessions are factored in, and as spending continues far outstripping revenues — for the national debt to hit $100 trillion and 193 percent of debt to the Gross Domestic Product (GDP) by 2037.
Fast forward seven years, and with just a couple of adjustments — the debt has grown a nominal 8.7 percent a year and the economy has grown nominally 5.5 percent a year since 1980 — and the debt is still right on target to hit $101 trillion by 2037, which will be about 172 percent of the by-then $58.4 trillion economy.
If treasuries rates were only 5 percent, that would be more than $5 trillion a year in interest alone owed to investors.
By 2042, debt-to-GDP will hit more than 200 percent at $153.4 trillion debt to the $76.4 trillion economy. Then, interest jumps to $7.6 trillion—and so on.
That is, if nothing is done — particularly if the government does not build an asset to offset the compounding liabilities that are rapidly accumulating.
But, what if there was? In February 2025, President Donald Trump proposed the creation of a sovereign wealth fund.
Well, what if it was seeded with the $7.7 trillion of intergovernmental treasuries that the federal government now holds? How might that work?
Congress could pass a law that converts the treasuries into marketable treasuries, and then are sold to the Federal Reserve or phased through Treasury or a new government vehicle in exchange for cash that is delivered to the Treasury — which are then used to buy a non-voting stake in the S&P 500. As for the Social Security and Medicare revenue shortfalls currently offset by the trust, those would just be satisfied instead by the general fund, which they will eventually if that’s what Congress decides it wants to do when the trust funds are exhausted in the 2030s.
The difference is right now the trust funds could essentially be converted into an investment vehicle with a much higher rate of return than the low-yield treasuries currently being held.
Whether all at once or phased in, the $7.7 trillion fund would on average grow about 10 percent a year plus 1 percent thereabouts of dividends. By 2029 it would hit $10 trillion. By 2044, $50 trillion.
At $63 trillion for the S&P 500, the government never approaches having a controlling interest in the companies, and in any event is prohibited from voting its shares. The companies would remain controlled by the private shareholders by design. The only point of the plan would be to accumulate wealth.
If all other things remained equal, that is, the debt kept growing as it has and so does the stock market, by 2051 sovereign wealth fund by reinvesting the dividends would hit $100 trillion, by then about one-third of the debt. By 2076, the 300th anniversary of the Declaration of Independence, it would hit $1.4 quadrillion, or 54 percent of the debt.
And by 2106, it would reach $31 quadrillion — finally surpassing the national debt.
By then, none of us will be alive except maybe for the newborns of today. That’s for whose benefit this is for.
During that time, what would happen is investors would see the government saving money and being vested in the growth of the economy via the sovereign wealth fund plus Trump accounts that every child will have going forward similarly invested in the S&P 500, and this would maintain confidence that the U.S. can handle its obligations or a major war or another catastrophe.
For naysayers, this is not socialism. Instead, the companies stay privately owned and privately managed, again, the government is barred from voting the shares and the only purpose is to accumulate a financial asset that compounds alongside the debt rather than leaving the government’s balance sheet as pure liabilities.
Alternatively, Congress could and in all likelihood will do nothing, except wait for the trust funds to be exhausted, shift Social Security and Medicare to the general fund as the debt continues spiraling out of control — but without any growing asset to offset it.
If so, in a worst case scenario, interest rates will spiral out of control, the dollar will eventually be abandoned as the world’s reserve currency, hyperinflation could ensue and we could face a catastrophic default followed by depression, civil strife or worse and perhaps the rise of one-party socialism or some other radical, extremist party.
Doing nothing may be the most likely outcome — and it also might be the worst idea of all. Instead, with President Trump’s leadership perhaps there is another way — by investing in the American economy, in American companies and in the American people. Anyone got a better idea?
Robert Romano is the Executive Director of Americans for Limited Government Foundation.
