What Happened? |
This week, the U.S. national debt will surpass forty trillion dollars. The federal government is borrowing enormous amounts even outside a recession, while higher interest rates are making that accumulated debt increasingly expensive to maintain. The debt is the accumulated result of decades in which federal spending exceeded federal revenue. |
Top contributors to the soaring national debt include Social Security, Medicare, and national defense spending. Costs associated with an aging population and other government programs, tax cuts, economic downturns, pandemic relief, and, increasingly, interest on previously accumulated debt are also driving up the total. In just the first ten months of fiscal 2026, the federal government ran an estimated $1.8 trillion deficit, $169 billion larger than during the comparable period a year earlier. |
Why it Matters |
The most immediate consequence is increasing interest payments crowding out all other federal government programs. The Congressional Budget Office (CBO) projects net federal interest spending of more than $1 trillion in 2026, up from $970 billion in 2025. The CBO expects interest payments alone to reach $2.1 trillion annually by 2036. Interest is already consuming more federal resources than most individual government programs. |
Recent policy has added to those pressures. President Donald Trump’s 2025 reconciliation law reduced spending in some areas but cut projected revenues even more. The CBO estimated the law would increase deficits by about $3.4 trillion between 2025 and 2034. A February 2026 Supreme Court ruling striking down Trump tariffs imposed under emergency powers law also weakened an anticipated source of federal revenue. CBO estimated in March that eliminating those tariffs would increase projected deficits by about $2 trillion through 2036. |
President Trump has presided over a substantial portion of the national debt’s increase. During Trump’s first term, gross federal debt increased by roughly $7.8 trillion. When Trump returned to office in January 2025, gross debt was approximately $36.2 trillion. If it reaches $40 trillion this week, roughly another $3.8 trillion will have been added during his second term. Combined, that means about $11.6 trillion in gross debt, more than one quarter of the total in U.S. history has accumulated during President Trump’s two periods in office. |
U.S. national debt is already more than 100% of the gross domestic product (GDP) for the United States. Throughout history, when a nation’s national debt surpassed its total GDP, slower economic growth, higher interest rates, and an inability to respond to disasters frequently placed those countries in dire straits. Because the dollar is the reserve currency of the world, the U.S. can shoulder a higher debt to GDP ratio than most countries, but there is no question, national debt is on an unsustainable path. |
How it Affects You |
Forty trillion in national debt is less a financial cliff than a warning sign. As interest consumes a larger share of federal revenue, future presidents and Congresses will have less flexibility to cut taxes, respond to recessions, fund defense, or invest in infrastructure. |
Eventually, controlling the debt could require politically painful combinations of spending restraint and higher revenues. The real danger is not simply owing $40 trillion; it is reaching a point where the cost of carrying yesterday’s debt increasingly determines what America can afford tomorrow. |
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