Scott Bessent Says How Much Economic Growth Is Needed For The U.S. To Grow Its Way Out Of Its Debt Trap

Treasury Secretary Scott Bessent said the U.S. can grow its way out of debt with 3% yearly growth.

"We don't have a revenue problem. We have a spending problem," Bessent said on Tuesday in Dallas. He added that the combination of contained spending and 3% growth can put the U.S. on a more sustainable path to rein in on debt spending.

He went on to say he has been working with the director of the Office Management and Budget, Russ Vought, on a fiscal consolidation plan.

"We'll get to the other side of this Iran conflict and the underlying economy is very, very strong, and I think reaccelerating," Bessent added, pointing to the construction of new manufacturing plants across the U.S. and spending related to the AI boom.

Bessent had made a similar claim regarding growth at the G20 summit in North Carolina, claiming the world is "awash in debt" and economies need to "grow their way out" of the issue.

"Our goal here today is to reiterate that our message of growth. The world is awash in debt post [global financial crisis], post Covid, and the only way for us to get out of this is to grow our way out of this, Bessent said. "I'm confident that a lot of the leaders are very receptive to this," he added.

Bessent went on to blame the Biden administration for the current situation, claiming "I say sometimes that I feel like an emergency room doctor, and the economy is the patient, and the American people were backed over by the Biden Mack truck."

"We have stabilized the patient, and now we're in the healing portion, and real incomes are increasing," he said.

Elsewhere in the summit, Bessent claimed that G20 participants "identified several impediments" to growth, including "excessive regulatory and administrative burdens, poorly designed financial incentives and tax systems, insufficient public and private investment, internal market fragmentation and gaps in workforce skills and mobility." He then claimed that the U.S. is "setting the pace in addressing each of these policy failures."

The issue of debt went back to the forefront of the conversation this month after the U.S. national debt passed $40 trillion.

At third of the increase during the past decade took place during the Covid-19 pandemic, when the Donald Trump and Joe Biden administrations borrowed heavily to keep the economy afloat.

Annual interest payments on the national debt are projected to exceed $1 trillion this year, according to the CBO, putting them roughly on par with the size of the Pentagon's budget.