"The US has even more debt than we do, so we are fine too." Does this argument make sense?

"The US has even more debt than we do relative to GDP, and they are doing fine so we are fine too."

You hear this in the UK, Spain, Belgium and even more so in France. But does this argument make sense? Well... no!!

Let's compare France to the US, for example.

Look at the charts below. On the debt/GDP number itself, sure, counting all levels of government, French public debt reached 116% of GDP in 2025, and US debt 124%. It has increased more or less at the same pace for at least 25 years.

But a debt ratio tells you how much a country owes, not how easily it can carry it. On that question, France and the US are in VERY different positions.

First, the US economy grows much faster. Between 2001 and 2025, it grew by roughly 2/3 in real terms, France's by roughly 1/3. Faster growth makes debt easier to carry, because the economy and tax revenues can grow faster than the debt. With weak growth, more of the adjustment has to come from taxes and spending.

Second, France has much less room than the US on taxes. In 2024, all levels of US government combined collected 25.6% of GDP in taxes. France collected 43.5%, the second highest level in the OECD, and has raised taxes again since then. Yes, part of the gap reflects the larger role of private health insurance in the US. But even so, the US has far more room.

Third, spending, and its outsized item: pensions. France spends about 13% of GDP on public pensions, the US about 7%, although Americans don't spend much less on retirement overall. It's just that they fund close to half of it privately, a taboo in France. Worse, the French pension burden won't ease on its own: the OECD projects it still at 13.5% of GDP in 2060. And that was assuming the 2023 reform was implemented (it has now paused until 2028).

Fourth, the dollar's global role supports demand for US debt. About 57% of global foreign exchange reserves are held in USD. You have to invest them in something, and the simplest and most liquid product is US Treasury bonds. That makes it very unlikely the US will struggle to place its debt. France is protected as part of the Eurozone. That helps keep interest rates relatively low, but investors are getting skittish. This morning, Oct 6, France pays 4.8% on its 10-year debt, when Germany pays less than 3.5%. Problem: The more interest you pay, the more you need to borrow - a vicious cycle. And if France ever needs the ECB to step in, that help will come with conditions.

The US has its problems too. Its general government deficit was 6.8% of GDP in 2025, and it lost its last AAA rating last year.

But the difference is that the US has more ways out. No country can justify its debt simply by pointing to the US.

Analysis: NeuronVentures