Is America On Verge of Bankruptcy? Elon Musk Says There’s No Way US Solves Debt Crisis

On Sunday, November 2, tech billionaire Elon Musk renewed his warning about America’s fiscal outlook. He said the federal debt has grown so large that it can’t be fixed without a major jump in productivity. 

“If AI and robots don’t solve our national debt, we’re toast,” Elon Musk warned, raising fresh concern that US finances are heading toward a breaking point.

His comment resurfaced in new coverage of a recent podcast appearance, at a time when the national debt exceeds $38 trillion and interest costs remain high.

It climbed from $37Tn in August to $38Tn by October 22, marking the fastest $1Tn increase outside the pandemic period, and coming during an ongoing federal shutdown.

US government data shows total public debt reached about $38.11Tn as of October. 30, according to the Treasury’s “Debt to the Penny” database. 

(Source: Congressional Budget Office)

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Does Issuing Debt in US Dollars Protect America From Bankruptcy?

The FY2025 deficit was roughly $1.8 trillion, based on estimates from the Congressional Budget Office.

A growing part of the problem is interest. Budget analysts say these payments have at times matched or passed some of the nation’s largest programs over the past two years. 

The Committee for a Responsible Federal Budget noted that interest costs surpassed spending on national defense and Medicare for much of FY2024, and current trackers show interest charges moving toward $1 trillion in 2025. 

The 10-year Treasury yield ended last week near 4.1%, based on the Fed’s constant-maturity data. 

(Source: Fred)

The spread between the 10-year and 2-year yields is now slightly positive after a long inversion. Both suggest that borrowing will stay expensive even if the economy slows.

The latest monthly review from the Congressional Budget Office estimates the FY2025 deficit at about $1.8 trillion. That’s roughly 6% of US GDP and remains little changed from FY2024, even after accounting for tariff revenue and shifts.

Longer-run CBO forecasts indicate that federal debt held by the public will rise from approximately 100% of GDP in 2025 to roughly 107% by 2029. The report warns that the share will continue to rise if current laws stay in place.

Critics say Elon Musk is simply saying what bond markets already worry about: interest costs are higher for good, and Washington’s chance to stabilize the balance sheet is shrinking.

Others say the US is not on the verge of bankruptcy because it issues debt in its own currency and still benefits from deep global demand. Even so, they argue the country needs a credible plan to slow the growth of borrowing.

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