The United States federal debt reached $40 trillion on August 18, a record high. Fortune quotes the United States economic organization, The Conference Board, from the Public Policy Department, that if the fiscal deficit continues to widen, the impact will not be confined to government accounts, and the cost of loans and retirement income will be channelled.

This estimate divides the next decade into several scenarios, including maintaining the current budget office's forecast, lowering the deficit to 3 per cent of GDP, expanding it to 9 per cent, and stress scenarios such as one week of government default and a large increase in interest rates in 2029. The core logic is that the more government debt comes, the higher the returns investors demand, and that student loans, housing mortgages and small business loans are often priced with a 10-year United States debt return.

The student loan burden rises with interest rates

A student who was enrolled in 2028, borrowed $45,000 in an undergraduate loan and $30,000 in a post-graduate loan were measured as having a total repayment of approximately $10.36 million for 10 years under the baseline scenario.

If the fiscal deficit is contained, total repayments can be reduced to approximately US$ 10.28 million, saving about US$ 870; if the deficit continues to grow, total repayments will rise to about US$ 10.46 million. In the event of a one-week government default in 2029, the total would increase to approximately $1,065 million.

Under the extreme interest rate shock scenario, the student ' s total repayment will rise to $12.37 million, close to $20,000 higher than the baseline scenario.

Households buying a home face higher mortgage expenses

The report also cited a plan to purchase $600,000 in first-aid four-member homes. The gap between the lower deficit and the higher deficit scenario for the purchase of housing in 2031 is approximately $25 million.

If the purchase is delayed until 2036, the gap will widen further. In the higher-deficit scenario, the household ' s total mortgage expenditure is estimated to be approximately US$ 24 million higher than the base scenario, and additional costs could amount to about US$ 200,000, or 19.2 per cent higher, if extreme interest rate shocks occur.

Even in the case of a one-week government default, by 2036 such households would have incurred additional expenditure of approximately $45,000.

Small business finance is rising in tandem with social security pressure

For small business owners who planned to expand their business in 2031 and 2036 respectively, the total financing cost under the baseline scenario was approximately US$ 33.47 million. If the deficit is reduced, it can be reduced by approximately $6,300; if the deficit deteriorates, it will be increased by about $6,500.

In case of government default, the additional cost would be approximately $20,000; in case of extreme interest rate shocks, the total cost of financing would be approximately $65,000 more than the baseline scenario, an increase of nearly 19.5 per cent.

The pressure on the social security component came from the trust fund reserve. As projected by the Budget Office of the United States Congress, the Social Security Trust could run out of reserves in 2032. If Congress does not act, benefits will be paid on the basis of current wage tax revenues. A retired person who was expected to receive a monthly social security benefit of US$ 2466 in 2032 may receive only US$ 2293, and the monthly gap will widen further by 2036.

According to the report, if Congress chooses to allocate approximately $2.7 trillion from general financial resources to fill the gap between 2032 and 2036, it will also directly increase the fiscal deficit and further raise other financing costs. In other words, debt pressures will not disappear and will shift between sectors.