The United States’ current borrowing trajectory will place an “undue burden on future generations,” an economic think tank has warned, with younger generations facing a higher interest rate environment, slower economic growth, and stalling wage increases.
The latest research from the American Action Forum chimes with concerns across both the public and private sectors. Everyone from JPMorganChase CEO Jamie Dimon to Fed chairman Jerome Powell is nervously eyeing the nation’s $38 trillion debt burden. The government has paid $10 billion a week to service the debt for the first few months of the 2026 fiscal year.
Economists are concerned that, at some point, the growth of the American economy will become so disconnected from the borrowing of its government that bond buyers will demand higher premiums on their loans. The worry is that the central bank will intervene by increasing the money supply—kick-starting an inflationary cycle—but that ultimately the government may have to cut back on spending.
Bridgewater Associates founder Ray Dalio has described this scenario as an economic “heart attack,” with government investment squeezed out by the need for the country to maintain its debt obligations.
Younger people will face the sharpest end of that outcome, warned Jordan Haring, director of fiscal policy at the American Action Forum. Haring, formerly a senior policy analyst at the Committee for a Responsible Federal Budget (CRFB) wrote in a note this week: “The United States’ high debt load exacerbates generational imbalances. These imbalances will ultimately burden younger and future generations with higher interest payments, slower economic growth, slower income growth, and a greater burden to bear for future tax or spending changes.”
She continued: “Without significant policy changes to reduce debt growth, future generations will inherit a budget where significant resources are locked into servicing past borrowing.”
“As interest costs rise, the federal government will have less money available for education, infrastructure, or scientific research—areas that directly support long-term prosperity. Future taxpayers will face higher tax burdens or reduced government services simply to cover the costs created by previous budget deficits.”
Haring pointed to the discrepancies in budgets between education and health services, for example. Already the gap is large: In 2025, the Department for Education requested $82.4 billion for its budget, while in 2024 Medicaid spending totalled more than $900 billion, per the Medicaid and CHIP Payment and Access Commission.
With an ageing population, it is likely that spending on social care will increase over the coming decades. Lower birth rates will mean fewer entrants into the ranks of the economically active to maintain the revenues gathered by the government.
While the accuracy of the conservative think tank’s research has been criticised in the past, Haring’s stance has been echoed by the likes of BlackRock’s Larry Fink.
Last year, Fink urged corporate leaders and politicians to pursue “an organized, high-level effort” to rethink the retirement system. In a letter to BlackRock investors, Fink wrote: “The federal government has prioritized maintaining entitlement benefits for people my age (I’m 71) even though it might mean that Social Security will struggle to meet its full obligations when younger workers retire.”
He added: “It’s no wonder younger generations, Millennials and Gen Z, are so economically anxious. They believe my generation—the baby boomers—have focused on their own financial well-being to the detriment of who comes next. And in the case of retirement, they’re right.”
The Great Wealth Transfer option
With a shift in economic activity from one generation to the next also comes with new flows of wealth, and this is something governments around the world will be looking to leverage, according to experts.
Studies have found that over the next 20 to 30 years as much as $124 trillion will be passed down from older generations to their younger counterparts, though UBS puts the figure of the “Great Wealth Transfer” at $80 trillion. Baby boomers—people born between 1946 and 1964—are the wealthiest generation in history, and as these individuals begin passing on their assets, sums will go immediately to their Gen X, millennial, and Gen Z successors, and some cash will go to spouses.
“The change in wealth comes at a time when many governments around the world have high debt and deficits. It seems unrealistic to suppose that governments will just sit idly by as this wealth moves around. We would expect governments to attempt to mobilize that wealth to help fund their debt, but in doing so that denies private sector investment access to some of those funds.”
