Analysis: AI Unlikely to Serve as a "Savior" for US Treasuries, Productivity Dividend Slow to Materialize Alongside Tax Base Erosion Could Worsen Debt Challenges
BlockBeats News, June 17th. Guolian Minsheng Securities released a research report pointing out that despite the market's hope for AI-driven productivity to alleviate the pressure of U.S. debt, based on historical experience and current reality, AI is unlikely to replicate the debt reduction miracle seen after World War II or during the Clinton era in the short term. By the end of 2025, the size of the U.S. national debt will reach nearly $38 trillion, with net interest expenses approaching $1 trillion.
The report outlined three paths to reduce the debt-to-GDP ratio: lowering interest rates, boosting economic growth, and narrowing the fiscal deficit. In history, the U.S. has successfully reduced debt twice—between 1946 and 1974, relying on post-war high growth and technological transformation, the debt-to-GDP ratio dropped from over 100% to about 20% over 30 years; in the 1990s, leveraging the Internet revolution and the Clinton administration's fiscal discipline, the U.S. achieved an average annual primary budget surplus of about 3.2% from 1996 to 2001.
However, this round of AI-driven debt reduction faces two major realistic constraints. Firstly, there is a significant time lag in the release of AI-driven productivity gains. According to the University of Pennsylvania's estimation, between 2026 and 2027, AI can only increase total factor productivity by 0.05 to 0.1 percentage points. It is not until the early 2030s that the contribution increases to about 0.2 percentage points, which is far from sufficient to offset the current fiscal pressure. Secondly, AI accelerates the concentration of benefits towards capital, eroding the tax base systemically. Individual income tax and payroll tax collectively contribute about 85% of federal fiscal revenue, and AI-induced labor displacement and wage polarization will directly impact this main tax source; corporate income tax accounts for only about 10% with a single rate of 21%, coupled with the tech giants' ability to avoid cross-border taxes, making it difficult to fill the personal tax gap, resulting in a paradox of "the more prosperous the technology, the more depleted the tax base."
The report believes that breakthrough directions include increasing capital gains tax and wealthy individual tax rates, imposing a "digital element tax" on large AI model business profits, and exploring a "robot tax" to subsidize the technically unemployed population. However, they all face structural dilemmas such as the difficulty in managing cross-border flow of AI elements, the strong political gaming capabilities of tech giants, and unilateral taxation to suppress innovation. The report concludes that financial and tax adjustments in the AI era are destined to be a long-term institutional tug-of-war, and the U.S. debt issue remains a significant obstacle that the American economy is unlikely to overcome in the short term.
