Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Billionaire investor David Rubenstein warns that the surging debt cost is a “grenade” threatening to blow up the economy. The co-founder of The Carlyle Group is raising the alarm as interest debt payments outpace the US defense budget — one of the country’s largest expenses. Rubenstein fears the problem is unlikely to be solved any time soon as politicians and voters focus on other issues such as the job market and inflation.
Debt Payment vs Defense Budget
In an interview on Fox News, the leading investor underscored the $36 trillion national debt and the ballooning costs of servicing that debt. More specifically, he noted that annual interest payments climbed higher than the US defense budget and the economic risk this development poses. “[W]hen you’re paying more in interest on your debt than your defense budget, the country is in trouble,” he cautioned. This is the first time interest outlays eclipsed defense spending in modern history.
The Alarming Numbers
The national debt pulled $870 billion from the federal budget in the first 11 months of the 2024 fiscal year, according to the Congressional Budget Office (CBO). Due to higher interest rates and increased spending, this year’s debt payments were $227 billion more than the previous, marking a 35% rise.
During the same period, the Department of Defense spent $753 billion, meaning interest expenses exceeded the defense budget by over 15%. Debt servicing costs also surpassed Medicare, which totaled $847 billion. Social Security remained the country’s largest expense, exceeding $1.3 trillion. This places managing the national debt as the second-largest expenditure in the federal budget.
Radio Silence
A growing number of respected voices are desperately trying to call attention to the colossal debt problem and the catastrophic economic consequences that could ensue. Unfortunately, these warnings are falling on deaf ears amongst the government and the public. “Right now, people are more interested in other things, inflation or jobs, but not the debt,” Rubenstein lamented.
He also acknowledged the radio silence from both political camps regarding the issue. Neither presidential candidate has issued a plan for tackling the debt problem. Furthermore, economists have predicted that Trump’s economic proposal could pile trillions on the mountain of debt instead of cutting back on spending. The topic is considered a third-rail of politics given the drastic measures likely required to address it. Ignoring the problem is “like a grenade that you’re taking the cap off”, Rubenstein continued, “It’s not a problem until it is.”
“We Can’t Keep Doing This”
Along with most investors, Rubenstein isn’t holding out hope that the next administration or members of Congress will take the difficult yet necessary steps to address the nation’s debt crisis. However, that doesn’t mean an end isn’t in sight. In reference to skyrocketing debt costs, he explains, “There’s an old saying in economics, if something can’t keep going on forever, it won’t. And I think at some point we just can’t keep doing [this].”
The Impact of Soaring Debt
While nobody can perfectly predict what the fallout will look like, the consequences of the debt debacle are evident. The dollar is losing its status as the world reserve currency as foreign nations begin seeing the greenback as a risk instead of an asset to their economies. With a massive chunk of US debt being held by central banks around the world, the value of the dollar weakens as countries move away from it. This inevitably harms American investors who have the majority of their wealth tied up in dollar-linked assets such as stocks and bonds.