US PUBLIC DEBT TRAJECTORY AND INTEREST PAYMENTS SET TO WORSEN AND EXCEED SOVEREGN PEERS

Scope Sovereign Rating Level and Rating Outlook in Parentheses. Source: IMF, Scope Rathings. Mandatory Spending, Long-Term Fiscal Pressures to Drive Budgetary Outcomes Constrained Budgetary Flexibility Limits of the Administration’s Ability to Offset Higher Expenditure Needs with Significant Specting Cuts or Revenue Increses. In 2024, Mandatom Spending, Including on Major Healthcare Programmes and Social Security, Accounted For AUND 60% of Federal Spending. Discretionary Spending, WHICH IS DETERMINED BY CONGRESS AND THE ADMINISTRATION IN THE ANNUAL BUDGET AND APPROPRIPRIPIMS PROCESS, ACCOUNCED FOR AROUND 27%, OF Wich ALMOST HALF RELATES TOO RELATES. Net Outlays on Interest Represited AUNDING 13% of Total Annual Spending.

Continued Spending Pressures, Particularly from Rising Manding SPEENDING AND OUTLAYS ON INTEREST WILL LIKELY PUSH The GROSS Federal Debt Ratio to 169% of Gdp by 2055 This Tradery Also Reflects Long-Run Ageing-Related Spending Pressures. The IMF Estimates A Net Present Value of Health Care (112%) and Pension (15%) SPEENDING OF 127.5%of GDP Over 2024-50, The Highest Projected Burden Among Advanced EConomies.

President Trump’s Proposyd Reductions in Discretionary Funding for The Fiscal Year 2026-27, Combined with Highher -ta-Exectored Revenues from Tariffs, Are Unlikeli. Proposals Include Significant Cuts to Non-Defense Discretionary Spending of 22.6%, OR USD 163BN.

Still, with Total Government SPEENDING OF USD 6.75TRN IN 2024, SUCH SPEENDING CUTS Wuldy Represent Only 0.5% of GDP. In Addition, Proposals to Raise Defence Spending by 13% Suggest That Total Discretionary Spending Will Remain Broadly Unchanged. Additionally, New Tariffs Announced in April 2025 on “Liberation Day” Could, Account to Estimates by The University than 0.5% of GDP).

EVEN IF Additional Savings Can Be Identified by Reducing Fraud and Improper Payments, Significantly Reducing The Budget deficit THRROUGH SPOUNDING CUTS WOURLD. However, Political Constraints Make Such Measures Unlikely. In the abscess of cuts to social security, Medicare or defense-RELATED SPEENDING, STABILISING THE FEDALAral DEBT Trade Tradecy Will Prove Challenging Without New Revenue-Tasing Measing Such.

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Eiko sievert is an Executive Director in Sovereign and Public Sector Rathings at Scope Rathings Gmbh.