In a hard-hitting Real Conversation with Hedgeye CEO Keith McCullough and veteran Macro analyst Josh Steiner, Congressman David Schweikert (R-AZ), Chairman-designate of the U.S. Joint Economic Committee, laid bare the ugly truth about the U.S. National Debt: The debt crisis is far worse than most Americans realize.
This isn't just another political debate—it’s a reality check from people who actually understand the math.
If you care about your portfolio and the future of the U.S. economy, you need to pay attention. Watch the full conversation here and dive into the biggest takeaways below.
1. The U.S. Is Accumulating More Debt in 10 Years Than in Its Entire History
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"We may take the next 10 years and the amount of publicly sold debt will equal where we were last November—that took 240 years to get to. 240 years of debt, and we’re going to double it in 10." – Rep. David Schweikert |
The U.S. is set to pile on more debt in the next decade than it did in the first two centuries of its existence—combined. The math is simple: Borrowing at current projections means we’ll add another $30 trillion in the next decade.
- Debt-to-GDP has hit 100% and is on track to reach 171%.
- Interest payments are skyrocketing, devouring more tax revenue every year.
- Political leaders from both parties avoid hard conversations, preferring short-term fixes that kick the can down the road.
Josh Steiner weighed in:
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"From 1962 until 2007, debt-to-GDP ranged from 23% to just under 50%. Since 2008, it has exploded to nearly 100%." |
2. Untouchable and Unaffordable: How Social Security and Medicare Are Driving the Debt Crisis
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"In Washington, touching Social Security and Medicare is considered political suicide. But the reality is, these programs are the single biggest drivers of our debt crisis." – Rep. David Schweikert |
The 'third rail' of American politics—Social Security and Medicare—are the biggest drivers of debt, yet politicians refuse to address them for fear of voter backlash. These programs eat up the bulk of tax revenue, and as Baby Boomers retire, the problem only worsens.
- Social Security’s trust fund is projected to run out by 2033—meaning benefits will need to be reduced or funded by additional borrowing.
- Medicare costs are accelerating due to rising costs and an aging population.
- Ignoring these issues means that future generations get stuck with the bill.
Keith McCullough added:
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"It’s sad and pathetic to hear that, but I smell opportunity here… The fourth turning is when a generation can’t screw it up anymore and the next generation has to pick up the pieces." |
3. Politicians Are Addicted to Fake Math
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"Be careful. The fraud is baked in. Do what’s easy on the spending side, then lie about the debt projections." – Rep. David Schweikert |
Washington’s budgeting process is rigged to make debt look smaller than it really is. The Congressional Budget Office (CBO) often underestimates interest rates and overestimates GDP growth, making the debt crisis seem less dire.
- The CBO assumes tax cuts will expire—but in reality, Congress always extends them.
- "Dynamic scoring" assumes tax cuts will pay for themselves through economic growth, even when historical evidence says otherwise.
- The bond market knows that real debt numbers are worse than reported.
Keith McCullough didn’t hold back:
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"If you start telling me that 1+1=8, I just won’t believe you, especially if you’re a Baby Boomer politician who’s been bipartisan on this." |
4. The Debt Time Bomb: Rising Interest Rates
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"I don’t think we have enough understanding either, because there’s no free option anymore. If interest rates move against us, we’re going to refinance what, $10 trillion just this year?" – Rep. David Schweikert |
Rising interest rates don’t just mean higher borrowing costs—they mean more of your tax dollars are going toward paying interest on the debt instead of funding government services, benefits, or defense.
The Federal Reserve’s ability to cut rates is limited, as doing so would risk reigniting inflation.
- Trillions in U.S. debt must be refinanced at much higher interest rates.
- Soon, interest payments will consume more taxpayer dollars than defense, Medicare, or Social Security.
- Without massive economic growth, debt payments will keep crowding out everything else in the budget.
Josh Steiner explained:
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"I pulled the January 2025 numbers from the CBO just before this call. Assuming tax cuts expire, deficits still range in the low fives to mid sixes annually. Historically, they underestimate by about 2%. That puts the real number around 7-7.5%." |
5. AI and Immigration Are Our Only Hope
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"We should be grabbing every smart person and bringing them into our society. Second thing—stop being afraid of AI." – Rep. David Schweikert |
If there’s any path forward that avoids disaster, it involves aggressive adoption of productivity-enhancing technologies and a shift toward a talent-based immigration system.
- The U.S. has a declining working population, making skilled immigration an economic necessity.
- AI and automation can drive productivity gains, offsetting demographic declines.
- Bureaucratic resistance to disruptive innovation prevents the kind of economic acceleration needed to stabilize our debt.
Keith McCullough cut to the core issue:
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"One of the reasons I’ve become much edgier—if not almost bordering on angry—is that there really are solutions. But politicians refuse to take them seriously." |
The Market Will Eventually Force Washington’s Hand
Washington’s bipartisan fiscal irresponsibility has created a debt crisis with no painless solutions. The only question is whether policymakers take proactive steps to fix it—or whether the bond market does it for them, the hard way.
We don’t trade on hope at Hedgeye. We trade on math.
And the math says this: If the economy slows and deficits rise while rates stay high, the stock market is not going to like the outcome.
The key to navigating this? Having a risk management process that adapts as economic conditions shift. If you’re not already using Hedgeye’s proprietary Risk Range™ Signals and Full Cycle Investing™ process, now is the time.
Download the Hedgeye App today to get real-time market insights and make sure you’re positioned ahead of the next market move.
