Artificial Intelligence (AI) could serve as a catalyst for stabilizing US public debt by significantly boosting productivity and economic growth. This is the assessment of Mario Draghi, former President of the European Central Bank and former Prime Minister of Italy, who nonetheless attaches a strict condition: the drastic reduction of fiscal deficits.
Productivity as a Stabilization Tool
Speaking to Bloomberg, Draghi argued that AI-driven productivity gains could make it feasible to keep the debt-to-GDP ratio near 100% over the next decade. According to Draghi, the required increase in productivity is not insurmountable, provided that these gains translate into higher GDP, allowing the economy to outgrow its liabilities.
However, Draghi was clear: technological progress cannot substitute for political will. He criticized the lack of meaningful initiatives from US political leadership to curb spending, noting that the fiscal deficit continues to widen despite the opportunities presented by technology.
The $40 Trillion Threshold
Draghi's warning comes as the US federal debt has surpassed the historic milestone of $40 trillion. Projections from the Congressional Budget Office (CBO) paint a grim picture:
- Debt is expected to reach 108% of GDP by 2030.
- By 2036, the ratio is projected to soar to 120%.
These forecasts exceed the previous historical high of 106% recorded in 1946, in the immediate aftermath of World War II.
Consensus Among Global Officials
Draghi's views align with those of other top economic figures. IMF Managing Director Kristalina Georgieva and ECB President Christine Lagarde have also warned that growth alone—even if bolstered by AI—is insufficient to defuse the debt time bomb if Washington fails to implement fiscal adjustments.
