US Debt Crisis May Already Be Underway, Expert Warns

Financial Times journalist Robin Wigglesworth warns that the American debt crisis may already have begun, though it is developing gradually rather than through an abrupt bond market collapse. This caution accompanies news that US debt servicing expenses reached a record $1.1 trillion for fiscal 2026. Rather than triggering an immediate default, the national debt predicament is steadily draining the federal budget, tightening its economic squeeze throughout 2026.

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

Wigglesworth, author of A Fabulous Debt, shared on The Long View podcast that his concern over the situation has grown, though he remains less alarmed than many others.

Robin Wigglesworth had this to say:

“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

Much of this pressure stems from refinancing, as older Treasuries issued at 1% to 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) calculates that interest payments hit a record $1.1 trillion in fiscal 2026. This amounts to 3.4% of GDP—surpassing spending on both defense and Medicare—and serves as the clearest indicator of the unfolding debt burden, with servicing costs continuing their upward trajectory. Wigglesworth estimates the current figure is slightly higher, between 3.5% and 3.6% of GDP.

He also said this:

“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 visualize a US national debt crisis concluding similarly to historical scenarios in Argentina or Greece, characterized by sudden default and subsequent restructuring. Wigglesworth rejects that outlook for the United States.

He stated:

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

Wigglesworth also said this:

“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 calm perspective. With the 10-year Treasury yield exceeding 5%, CRFB President Maya MacGuineas issued a more urgent warning:

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

What Venice Teaches About Government Debt

Government debt dynamics also carry deep historical roots. Wigglesworth’s book traces modern bonds back to 1171, when Venice financed a military fleet through tradable loans yielding 5% annually. Although Venice never paid off that principal, the Rialto established the world’s inaugural bond market.

Adding to these concerns, Scope Ratings issued a warning this month, maintaining the US credit rating at AA- while projecting that national debt will approach 160% of GDP within ten years. Thus far, the financial strain in 2026 has materialized as a slow grind, leaving Washington with fewer fiscal policy instruments for the next economic downturn—a factor relevant to investors holding bonds, equities, or cryptocurrencies. Wigglesworth cautions that while the national debt issue may never trigger a sudden explosion, the ongoing toll could still prove quite painful.

?Frequently Asked Questions

01How much are US debt servicing costs in fiscal 2026?

According to the Committee for a Responsible Federal Budget (CRFB), interest payments reached a record $1.1 trillion in fiscal 2026, which accounts for approximately 3.4% to 3.6% of GDP.

02Why are US debt servicing costs increasing?

Costs are rising because older Treasury bonds issued at low interest rates (1% to 3%) are maturing and being replaced with new borrowings at significantly higher rates (up to 6%), compounded by a persistent federal budget deficit.

03Does Robin Wigglesworth expect a sudden default like Greece or Argentina?

No. Wigglesworth argues that because the US prints its own dollars, the crisis will not manifest as a sudden default or hyperinflation, but rather as a slow erosion of financial health that reduces discretionary federal spending.