Trump plans to grow his way out of $40 trillion debt crisis—it’s a ‘fantastic story’ but virtually impossible, says top budget economist

The U.S. national debt has hit $40 trillion , and the Trump administration is facing questions about its budget plans as a result. The good news is, there has one: The American economy will apparently grow its way out of any fiscal crisis. "It's been a problem for 35 years," Trump told reporters Friday. "And what we have now … is we have tremendous growth. And the way you take care of debt is with growth, and we have tremendous growth. We've never had growth like we have right now." "There's nothing magic about the $40 trillion number," Treasury Secretary Scott Bessent said on CNBC last week, "And we can grow our way out of that."

Economists would be inclined to agree with Bessent: The value of the debt, while an extraordinary milestone, doesn't hold much relative weight. What economists (and more importantly, the bond market) is watching is the debt-to-GDP ratio: This demonstrates the level of borrowing by a country against its economic capacity to repay and service it.

Currently, the U.S. ratio stands at 122%. To bring it back into a lower balance, an economy could cut its borrowing or—as Bessent suggests—increase its growth.

When the alternative is cutting borrowing and, as a result, government spending, the growth plan is a more optimistic and politically palatable route.

It's also the latest in a series of solutions proposed by the White House: Originally, President Trump had suggested that tariffs would pay down the national debt (the plan was quickly nixed by a Supreme Court ruling ordering the administration to repay approximately $100 billion in revenues that the justices deemed illegal).

Trump later suggested a "golden visa" strategy —selling rich immigrants visas at $5 million each—could pay down the national debt. The policies were novel, but economists broadly welcomed action by the Trump Administration on the fiscal picture.

But now there a bond market reckoning looming. The risk premium demanded by investors for holding the 30-year Treasury rose to over 5.3% in recent days, prompting U.S. Treasury Secretary Scott Bessent to deploy $4 billion or more in unscheduled buybacks. If the U.S. can't pay its debt, the worst-case scenario is a default crisis.

So, can the U.S. grow its way out of debt? It's a "fantastic story," says Kent Smetters , Boettner Professor of economics and public policy at the Wharton School at the University of Pennsylvania.

Unfortunately, Professor Smetters—the faculty director of a fiscal analysis tool called the Penn Wharton Budget Model—says the plan is also "pretty clearly" not feasible. He explained in an interview with Fortune : "People often get the causality kind of opposite. They think more growth, less of a debt problem, and in reality, it's just the opposite … We deal with the debt issue in order to try to aid economic growth, not vice versa."