Speaking to Bloomberg Television in an interview on Monday, May 13, Goldman Sachs CEO David M. Solomon sounded the alarm bells on America’s huge level of national debt and the interest expense on it, an expense that now exceeds the amount spend on Medicare and national defense. That long-running problem has been exacerbated by the rising interest rates that have come with Federal Reserve Chairman Jerome Powell’s attempts to fight inflation.
As background, the cost of servicing the national defense has ballooned dramatically as rates have risen to around 5%, increasing to a whopping $514 billion for the first seven months of the fiscal year 2024 for the federal government. That makes servicing the debt the second biggest item in the budget after Social Security and larger than both Medicare and national defense.
Speaking to Bloomberg TV, Solomon said that the government needs to act seriously and address the issue, as letting it continue and letting spending continue to increase precipitously could lead to major problems. He said, “I think the level of debt in the United States [and] the level of spending is something that we need a sharper focus on and more dialogue around than what we’ve seen.”
Continuing, Solomon explained that though the government’s decision to spend massive sums during Covid made some degree of sense to keep the economy functioning, “we’re a long way out of that pandemic” and thus need to reexamine spending levels. “The spending levels…are continuing at a pace that I think is raising our debt level and creating issues for us down the road,” he said.
Further, he argued again that the issue needs to be getting more attention, saying, “It’s not getting as much attention as I’d like to see it get right now.” He added that while this year being an election year is probably why the issue has mostly gone unaddressed, it needs to be focused on by the government. He said, “But I do think it’s something that requires focus.”
Reiterating his point, Solomon told Bloomberg TV, “we need to deal with the debt and the deficits.” He also said that he hopes the issue will deserve its due degree of attention once the election is over and the government can pay attention to it without torpedoing the electability of those in charge, saying, “Hopefully, there will be a lot more discussion [about the issue] as we move through the election and into the next administration.”
Watch Solomon here:
Mr. Solomon isn’t the only high-powered CEO to focus on the national debt and problems coming from the interest expense. Tesla, Space X, and X’s Elon Musk posted about the issue on X earlier in May of 2024, saying, “We need to do something about our national debt or the dollar will be worth nothing.”
Further, the nonpartisan Committee for a Responsible Federal Budget warned that spending on servicing the national debt will outpace even Social Security by 2051. It added, “Rising debt will continue to put upward pressure on interest rates. Without reforms to reduce the debt and interest, interest costs will keep rising, crowd out spending on other priorities, and burden future generations.”
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