Scott Bessent Says US Can ‘Grow Our Way Out’ of $40 Trillion Debt—Economist Says ‘Not Feasible’

Treasury Secretary Scott Bessent said the U.S. can grow its way out of debt if annual economic growth reaches 3% annually each year.

In a Dallas Q&A on Tuesday at Southern Methodist University’s Cox School of Business, Bessent said, "We don’t have a revenue problem. We have a spending problem," and argued that containing spending alongside 3% growth could allow the U.S. to "grow our way out of this."

The U.S. national debt recently surpassed $40 trillion.

"We’ll get to the other side of this Iran conflict and the underlying economy is very, very strong, and I think reaccelerating," Bessent said, pointing to incentives in last year’s tax law and manufacturing investments.

Spending Plan Advances

Bessent said he is working with Office of Management and Budget Director Russ Vought on a fiscal consolidation plan to bring down the deficit.

Bessent said the U.S. would have collected about $180 billion in tariff revenue that could have gone toward the deficit if the Supreme Court had not struck down President Donald Trump’s “Liberation Day” tariffs.

In August, Bessent said there was a "very good chance" the budget deficit had peaked under Trump. He also said there was "nothing magic about the 40-trillion number" and that the U.S. could "grow our way out of that."

Debt Pressure Mounts

The debt milestone comes as 30-year Treasury yields have reached their highest levels in nearly two decades, while interest expenses have risen to record levels.

Penn Wharton Budget Model (PWBM) director Kent Smetters called the growth-focused approach a "fantastic story" but "pretty clearly" not feasible.

Bessent also said the Treasury will do more long-term bond buybacks, describing the process as "taking the most liquid portion of the bond market, liquefying it, and giving the bond buyers money to buy more."

Former Goldman Sachs commodities chief Jeff Currie called the approach "financial repression," citing rising debt-servicing costs.

Bessent said current interest rates are unusually correlated with energy prices but expects that relationship to break. He also said the oil market could be oversupplied within one or two years as U.S.-Venezuela energy ties develop and conditions normalize in the Middle East.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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