Macro economist Lyn Alden warns tariffs won’t stop U.S. debt spiral

The U.S. government’s renewed embrace of tariffs may be slowing deficits at the margins, but it does little to alter the country’s long-term debt trajectory, according to macro strategist Lyn Alden.

Speaking with Scott Melker, host of TheStreet Roundtable, Alden described tariffs as the largest tax increase in decades, one that policymakers have been able to push through by calling it a national emergency.

“One of the levers that does somewhat slow it are the tariffs,” Alden explained. “That basically represents, at least on a current monthly basis, the biggest tax increase in a very long time. It does reduce the near-term deficit, not by cutting spending, but by increasing taxes.”Lyn Alden and Natalie Smolenski speak on stage during Bitcoin Conference 2023 at Miami Beach Convention Center on May 19, 2023 in Miami Beach, Florida.Getty Images

As per reports, U.S. tariff revenue has surged to $165.2 billion in FY 2025 so far, with Treasury Secretary Scott Bessent projecting it could top $300 billion by year-end, as per data from Congress.gov. Meanwhile, the national debt stands at $37.4 trillion, equal to about 119% of GDP, with $30.1 trillion held by the public .

Even record tariffs cover only a fraction of the deficit, underscoring how entrenched U.S. fiscal challenges remain.

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Lyn Alden is a macroeconomist and investment strategist known for her deep analysis of global markets, fiscal policy, and digital assets. She founded Lyn Alden Investment Strategy, where she advises institutions and individual investors. Her research often bridges traditional finance with emerging sectors like Bitcoin and digital assets.

Deficits remain locked in

Despite the bump in revenue, Alden argued the U.S. remains structurally locked into running high deficits as a percentage of GDP. Federal spending is over $7 trillion annually, while income is closer to $5 trillion, leaving a persistent $2 trillion gap.

“The main point is that deficits as a percentage of GDP remain historically elevated,” she said. “While they can go up and down maybe a couple hundred basis points, they’re pretty locked in.”

Melker noted that debt service costs are now a critical factor.

“We’re paying a tremendous debt service on it, which inevitably makes it continue to increase even if you end up in a small budget surplus,” he said.

The end of the falling-rates era

Alden traced the roots of the debt problem back decades. While alarm bells rang in the late 1980s and early 1990s, interest rates kept falling for 40 years, aided by the opening of China, the fall of the Soviet Union, and a flood of cheap global labor. That allowed Washington to double its debt while halving its interest costs.

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“That period is over,” Alden warned. “Now the bond market is more demanding of yield, and the realities of the fiscal situation are understood.”

Why Bitcoin enters the conversation

For Melker, the “nothing stops this train” thesis has become shorthand for the inevitability of fiscal dominance. Alden agreed, saying the combination of structural deficits and higher debt service leaves policymakers with few real levers.

That backdrop, she noted, is exactly why Bitcoin continues to attract attention as an alternative asset outside the traditional system.

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This story was originally reported by TheStreet on Sep 22, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.

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