AI’s $2.2 trillion deficit fix is already half fake, economists say

AI could shave $2.2 trillion off the U.S. deficit by 2036. But according to a new working paper from economists at Brookings and the Federal Reserve, more than half of that savings could vanish — canceled out by the very disruption AI itself would cause.

In May, the U.S. national debt crossed the eye-popping $39 trillion mark. The difference between what the U.S. government spends and what it earns has become a galvanizing force for fiscal hawks of all political stripes. Without significant reform measures from Congress, the widening deficit threatens to deplete the trust funds that finance Social Security in 2032, and Medicare one year later.

Budget experts say fixing the deficit will require tax hikes, cuts to entitlement, or most likely, a combination of both. Absent that political will, AI has been floated as a fiscal escape hatch. A new paper suggests that escape hatch is narrower than advertised.