Under Trump, National Debt Passes $39 Trillion and Interest Tops $1 Trillion as Deficit-Hawk Politics Vanish

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On June 22, 2026, the gross national debt of the United States reached a record $39.32 trillion, according to the Treasury's Debt to the Penny dataset—up from $38 trillion eight months earlier and on pace to cross $40 trillion around late September. The $39 trillion figure is an all-time high in raw dollars. As a share of the economy, debt held by the public is near 100% of GDP, the highest since World War II, though still short of the 1946 record of 106%. The debt is a decades-old, bipartisan accumulation; it has more than doubled since the 2011 debt-ceiling standoff, growing under the Obama, first Trump, Biden, and second Trump administrations. The most recent additions came from the Trump administration: the One Big Beautiful Bill Act, signed in July 2025, which CBO estimates added about $4.2 trillion to deficits over ten years, and a $5 trillion increase in the debt limit. Federal interest payments now exceed $1 trillion a year, behind only Social Security and Medicare. What stands out about this milestone is how little reaction it drew. The deficit-hawk politics of the 2011 debt-ceiling fight have largely disappeared, and some economists now argue the debt-to-GDP ratio at the center of the old alarm is the wrong measure.

Current Debt Levels

According to the Joint Economic Committee, total gross national debt stood at $39.20 trillion as of June 3, 2026, an increase of $2.99 trillion from one year earlier and $10.94 trillion higher than five years ago. Over the past year the debt grew by an average of about $8.19 billion per day, or roughly $94,805 per second. Total gross national debt now amounts to approximately $114,653 per person and $290,860 per household. At the prevailing pace, the JEC projects the debt will reach $40 trillion around September 23, 2026.

The milestones have been arriving quickly. The debt crossed $38 trillion on October 23, 2025—amid a 23-day federal government shutdown—having taken only 71 days to climb from $37 trillion. Of the current total, debt held by the public is about $31.6 trillion (roughly 80%), with the remaining $7.7 trillion in intragovernmental holdings owed to trust funds such as Social Security and Medicare.

Debt held by the public—the figure most economists watch—was 99% of GDP at the end of fiscal year 2025 and is about 100–101% of GDP in 2026, the highest level relative to the economy since 1946, in the aftermath of World War II. The Congressional Budget Office projects it will rise to 120% of GDP by 2036, well above the previous postwar record of 106%.

Interest Payments Exceed $1 Trillion

The most concrete consequence of the debt is the cost of servicing it. According to the Peter G. Peterson Foundation, the United States paid $970 billion in net interest in fiscal year 2025, with gross interest exceeding $1 trillion for the first time. The American Action Forum notes that net interest was the third-largest government expenditure in FY2025—behind only Social Security and Medicare—and that the government already spends more on interest than on national defense, Medicaid, veterans' benefits, or transportation. CBO projects interest will overtake Medicare to become the second-largest item later this decade.

CBO projects net interest will rise from $1.0 trillion in 2026 to $2.1 trillion by 2036, making it the fastest-growing major category in the budget. Measured against the economy, net interest was about 3.2% of GDP in 2025 and is on track for 4.6% by 2036. As a share of federal revenue, interest payments rose to roughly 18.5% by the end of 2025.

Borrowing costs remain elevated. As of May 2026, the average interest rate on total marketable Treasury debt was 3.386%, little changed from a year earlier but more than double the 1.485% of five years ago—meaning each dollar of debt is now substantially more expensive to carry. On June 17, 2026, the Federal Reserve held the federal funds target steady at 3.50%–3.75%, signaling no near-term relief on Treasury borrowing costs.

Concerns About Sustainability

In its February 2026 outlook, CBO stated that the fiscal trajectory "is not sustainable," with deficits projected at $1.9 trillion (5.8% of GDP) in fiscal year 2026, rising to $3.1 trillion (6.7% of GDP) by 2036—well above the 3.8% average of the past 50 years. The problem is also self-reinforcing: even excluding interest, the government runs a "primary" deficit, and rising interest on the accumulated debt drives much of the deficit growth from here.

JEC Chairman David Schweikert has warned that the country is "getting dangerously close to the point where most of our federal budget will go toward paying interest on the debt."

The American Action Forum outlines the standard channels through which high debt does damage: it crowds out private investment, slowing income and wage growth; rising interest payments squeeze other spending; and it erodes the "fiscal space" available to respond to recessions or emergencies. By AAF's reading of CBO data, available fiscal space has fallen to about 6% of GDP and is projected to nearly disappear by FY2029. Academic work from the Dallas Federal Reserve estimates that each percentage-point increase in the debt-to-GDP ratio raises long-term interest rates by roughly 3 basis points—evidence that debt accumulation carries real costs regardless of which headline metric is emphasized.

There are early signs of strain in the Treasury market itself. The Bipartisan Policy Center noted a series of weak Treasury auctions in spring 2026, with primary dealers forced to absorb an unusually large share of some note sales—a possible signal of softening demand for a rapidly growing supply of federal debt.

Academic Debate: Is Debt-to-GDP the Right Measure?

Not all economists accept that the headline ratio is the right way to gauge the danger. In a January 2026 NBER working paper titled "Why Care About Debt-to-GDP?", Stanford finance professor Jonathan B. Berk and Wharton finance professor Jules H. van Binsbergen argue that the near-exclusive focus on debt-to-GDP may be misguided.

Berk and van Binsbergen construct three alternative measures of government indebtedness across 19 countries that account for most of the world's public debt: debt-to-GDP, interest-to-GDP, and debt-to-equity (using stock-market capitalization as a proxy for national wealth). The three reach different conclusions:

• Debt-to-GDP has roughly tripled in the United States over four decades, from about 40% to around 120%, reaching levels not seen since World War II.
• Interest-to-GDP reached comparable levels in the 1985–1995 period, when interest rates were much higher—suggesting today's burden is not unprecedented on this measure.
• Debt-to-equity shows no clear trend and has recently fallen to below-average levels, as equity valuations have grown substantially.

The authors point to Japan as an example of the disconnect: Japan carries a debt-to-GDP ratio near 250% yet no one expects it to default, while Argentina has suffered sovereign debt crises at ratios closer to 40%. As Berk put it: "We're borrowing at low interest rates and the stock market is up, not down... If the market thought we were going to default on our debt, then the market value of equity wouldn't be high and interest rates wouldn't be low."

Theoretical Concerns with the Ratio

Berk and van Binsbergen argue there is "little formal justification" for treating debt-to-GDP as the sole determinant of a country's debt burden. The ratio compares a stock variable (debt) to a flow variable (GDP), which requires strong statistical assumptions—essentially that debt and GDP move together over time—that are unlikely to hold given the long-term trends in growth and interest rates of recent decades. They suggest that stock-to-stock measures (debt-to-equity) or flow-to-flow measures (interest-to-GDP) may be more informative in a world with secular trends, since changes in growth expectations are reflected in equity prices and in the rates governments actually pay.

Current Debt-to-Equity Context

The market backdrop reinforces their point, even as it raises separate questions. As of early 2026, total U.S. stock-market capitalization was about $69 trillion, having added nearly $7 trillion in value during 2025; the broad Wilshire 5000 index has risen roughly 25% over the past year to record highs, implying a total market value approaching $75 trillion by mid-year. Against gross debt of about $39.3 trillion, that puts the implied debt-to-equity ratio near 53%—lower than at various points in the 20th century when equity valuations were smaller relative to the economy.

That same equity strength, however, cuts both ways. The Buffett Indicator—total market capitalization divided by GDP—reached about 236% in late June 2026, a record high and far above its long-term average near 165%. A debt-to-equity measure looks reassuring partly because equity valuations are themselves historically stretched; if valuations were to revert, the ratio would deteriorate even with no change in the debt. Berk and van Binsbergen do not claim the debt is benign—only that the dominant metric may not capture the risk well.

The Authors' Caveats

Importantly, Berk and van Binsbergen do not argue that current debt levels are high, low, optimal, or sustainable. Their narrower point is that without stronger theoretical foundations for the measures in use, "assertions about debt (un)sustainability may be premature." They note that corporate finance and macroeconomics began from similar starting points—the Modigliani–Miller theorem and Ricardian equivalence, respectively—but corporate finance went on to identify which assumptions fail and derive optimal capital structures, while macroeconomics retains "general notions that government debt is important... but little understanding of why seemingly low debt-to-GDP ratios can trigger sovereign debt crises" in some countries while much higher ratios elsewhere appear sustainable.

Policy Drivers and Projections

The trajectory reflects deliberate policy choices as well as demographics. The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, raised the debt limit by $5 trillion to $41.1 trillion and, by CBO's accounting, increased projected deficits by about $4.2 trillion over the next ten years—chiefly by making the 2017 tax cuts permanent and adding defense and homeland-security spending, partially offset by Medicaid and SNAP changes and the rescission of clean-energy tax credits.

Higher tariffs have pushed in the opposite direction. CBO estimates new tariff revenue netted $264 billion in calendar 2025, more than twice recent levels, and reduced projected deficits by roughly $3 trillion over the decade—though the agency cut its long-run tariff-revenue estimate as exemptions and trade deals multiplied, and the Supreme Court is weighing challenges to the underlying tariff authority that could erase much of it.

Over the longer term, the Committee for a Responsible Federal Budget projects debt held by the public rising to 108% of GDP by 2030, 129% by 2040, and 175% by 2056 under current law. Brookings estimates that simply holding the debt-to-GDP ratio at its current level through 2056 would require permanent spending cuts or tax increases worth about 2.33% of GDP starting in 2027—roughly $707 billion a year in today's economy, or about 14% of all current tax revenue.

The OBBBA at One Year: Front-Loaded Benefits, Deferred Costs

The July 4, 2026 anniversary of the OBBBA brought a round of assessments of how the law driving much of the new borrowing is actually landing. A Washington Post one-year review found that the law's benefits arrived first and its costs come later—a sequencing with direct fiscal consequences.

On the benefit side, the 2025 tax year (filed in early 2026) delivered a visible boost: average refunds of $3,275, up more than 11% from the prior year, which the Post reports acted as a short-term stimulus that helped offset war-driven increases in gas and grocery prices. Take-up of the new deductions was broad—more than 7.5 million filers claimed the "no tax on tips" deduction (average deduction about $7,000), more than 29 million claimed the overtime deduction, more than 35 million claimed the new $6,000 senior deduction, and roughly 40 million families claimed the child tax credit, permanently raised to $2,200 and pegged to inflation. Retroactive business provisions added their own jolt: full immediate expensing of capital and R&D investment drove what Penn Wharton's Kent Smetters called a surge in corporate refunds, costing the government roughly $69 billion in 2025, and expensing rules that ease rapid data-center construction have been a factor in record stock-market performance. A White House spokesman, Kush Desai, told the Post the law "is simultaneously delivering short-term economic relief while laying the groundwork for long-term economic growth."

The costs are back-loaded. The tips, overtime, and senior deductions all expire at the end of 2028; the roughly $1 trillion in Medicaid reductions and new 80-hour-per-month work requirements do not begin until January 2027—after the midterm elections—and CBO expects the law's health provisions to leave about 10 million more people uninsured by 2034; SNAP cuts total $211 billion through 2035. And the deficit effect—$4.2 trillion over ten years by CBO's estimate—compounds throughout. John Ricco of the Yale Budget Lab described the pattern to the Post as a "sugar high": the law delivers "benefits in the short term and kick[s] the can down the road in terms of paying for it fiscally or macro-economically."

The anniversary reporting also undercut one of the law's fiscal defenses. The OBBBA was expected to spur stronger economic growth in 2026—growth that would, in theory, offset some of its cost—but that estimate did not account for the war with Iran, which spiked inflation; the Post reports growth is now expected to come in much lower for the year. Since faster growth is one of the two main escape routes from a rising debt ratio (the other being fiscal restraint), a weaker 2026 makes the borrowing that financed the law harder to grow out of.

The Vanishing Politics of the Debt

The $39 trillion milestone drew little political reaction. The debt has more than doubled since the August 2011 debt-ceiling standoff, when it stood near $14.7 trillion and a fight over deficits brought the country close to default and cost the United States its AAA credit rating. The deficit-hawk movement of that era has largely faded. There has been no Simpson-Bowles–style commission, no grand-bargain negotiation, and no debt-ceiling fight organized around fiscal targets. The OBBBA, which added trillions to projected deficits, passed a unified Republican government with only scattered objection from the deficit hawks who once shaped the party's fiscal identity. A year on, House Republicans marked the law's anniversary with celebration rather than any renewed attention to its deficit cost.

Economists and analysts read the silence two ways. One view is that the fading concern is reasonable. After more than a decade of warnings, the predicted crisis never came. Markets still lend to the United States at modest real rates, equity valuations are at record highs, and the Berk and van Binsbergen research argues the old metric never measured the danger well. By this account, the quiet shows the hawks overstated the risk.

The other view is that the complacency is the danger. By this account, political concern dropped away just as the debt grew larger, interest costs passed $1 trillion, and a major deficit-financed tax law passed with little resistance. The lack of debate is a warning sign, not reassurance, because the country has stopped arguing about a path its own budget office calls unsustainable. The one-year OBBBA record gives this view a mechanism as well as a mood: a law whose benefits are felt immediately in refund checks while its offsetting cuts and deficit costs arrive after the next election faces little organic political pressure for correction. Both views are held by serious people, and current evidence does not settle the question.

Public understanding adds to the difficulty. Americans tend to overestimate the share of the budget that goes to small items like foreign aid and underestimate spending on Social Security, Medicare, and interest, which drive the long-run path. That matters because stabilizing the debt would require changes to exactly the programs that have the broadest public support and the strongest resistance to cuts.

Historical Context

The United States has reduced a comparable debt burden before. According to RAND, federal debt reached 106% of GDP in 1946 and was brought down to 23% by 1974 through a combination of fiscal restraint and strong economic growth. RAND estimates that returning to that level by 2055 could save more than $20 trillion in inflation-adjusted interest over thirty years—but would require either implausibly high real growth (about 3.2% above inflation annually, a rate the U.S. has not sustained in modern times) or a sustained mix of spending cuts, revenue increases, and productivity gains.

This is why the milestone is hard to judge. The debt is large, rising, and more expensive to service every year; CBO says the path is unsustainable; and the Trump administration's fiscal choices added to the debt. At the same time, markets still lend to the United States cheaply, equity values are at record highs, serious economists question whether the headline metric measures the danger, and the political concern that once surrounded the debt has gone quiet. Whether the current calm proves justified depends on what happens next: interest rates, economic growth, and the choices of this Congress and the next—and on the growth front, the early returns are discouraging, with 2026 growth now expected to come in well below what the OBBBA's backers projected because of war-driven inflation. The interest costs are already crowding out other spending; whether a broader reckoning follows is not yet clear.