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? America’s soaring national debt, now over $36.2 trillion, has triggered growing concern among economists and credit agencies like Moody’s, which recently downgraded the U.S. credit rating amid fears that economic growth won’t keep pace with rising debt and interest payments.

Economists have criticized politicians’ plans to reduce America’s national debt as too little, too late. But analysts are warning that the issue is now coming home to roost, with the once unshakeable confidence in the United States’ fiscal future beginning to erode.

America’s national debt, which currently stands at more than $36.2 trillion, is increasingly rising on economists’ agendas. Their fear is that as the nation’s debt burden increases, alongside the interest payments to service the debt, the economy will not grow fast enough to sustain the spending.

Such fears were reflected in a Moody’s downgrade of U.S. credit last week from Aaa to Aa1. Moody’s justified: “While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics.”

The downgrade is yet another thorn in the side of America’s fiscal health, despite protestations from Treasury Secretary Scott Bessent that the market should take little heed of Moody’s news.

As Deutsche Bank’s Jim Reid put it in a note seen by Fortune this morning: “Yesterday felt like we were somewhere along the line of a ‘death by a thousand cuts’ with regards to the U.S. fiscal situation. Hard to know where in that thousand we are but probably much nearer a thousand than at zero even as yesterday saw an initial sell-off reverse as the session went on.

“At the end of the day the loss of the final U.S. triple-A rating late on Friday night doesn’t change anything much immediately but it keeps the drip, drip, drip of poor fiscal news building up against the debt sustainability dam in the background.”

President Trump and his cabinet are not blind to the national debt issue. Trump has suggested it could be paid off with the funds from his ‘gold card’ visa scheme, while the overriding message from DOGE (the Department of Government Efficiency) has been efficiency and cost-cutting.

But Trump is maintaining a delicate balance in the deliverables his campaign promises: cutting costs and reducing taxes, which, in turn, reduces the revenues needed to rebalance government spending.

The Trump cabinet is currently encouraging Congress to pass this “big, beautiful bill” of tax cuts. Some of this includes an expansion of the 2017 tax cuts, which are due to expire at the end of 2025, with notable additions such as axes to taxes on tips and overtime pay.

The Trump administration argues that the bill will actually help rebalance the debt-to-GDP ratio. Administrations have two choices to bring the balances into order: reduce the debt or increase GDP.

They say extending the tax cuts will do the latter, arguing their bill will raise short-run real GDP by 3.3 to 3.8% and long-run real GDP by 2.6 to 3.2%.

The Congressional Budget Office (CBO) disagrees. In an April report, the nonpartisan analyst organization stated that if provisions of the 2017 tax act were extended, thus lowering tax revenues, and with no other changes made to fiscal policy, public debt would reach 220% of GDP by 2025.

This would be 63 points higher than long-term baseline projections without the cuts.

Banking on the Fed

In the event of U.S. debt buyers losing confidence in the country’s ability to repay, America does have a card it can play in the form of the Fed.

The central bank could employ quantitative easing, a move that would likely raise eyebrows, to lower longer-term interest rates and make it easier for the government to continue borrowing.

While the bond market reacted fairly minimally to Moody’s downgrade, UBS adds that should volatility increase at some point, the Fed would likely act.

In a note sent to Fortune today, UBS’s chief investment officer Mark Haefele wrote: “Overall, we view this latest credit action as a headline risk rather than a fundamental shift for markets. We would also expect the Federal Reserve to step in if there were a disorderly or unsustainable increase in bond yields.

“So while the downgrade may lean against some of the recent ‘good news’ momentum, we do not expect it to have a major direct impact on financial markets.”