A billboard in Washington displays the current U.S. national debt at $36 trillion.
The U.S. federal government continues to accumulate record levels of debt year after year, amid growing concerns over long-term fiscal sustainability. As of May, the total amount the United States owes to lenders stands at $36.2 trillion—an amount nearing historical highs when compared to the size of the nation’s economy, a key metric in evaluating the government's ability to meet its financial obligations.
اضافة اعلان
Issues surrounding debt and the annual deficit have dominated much of the political discourse around President Donald Trump’s proposed “Big and Beautiful Law,” backed by Republicans. The proposal includes sweeping changes to tax and immigration policies, and the GOP is aiming to pass it through Congress before the Fourth of July.
According to nonpartisan estimates reported by The Washington Post, this legislation could add nearly $3 trillion to the national debt over the next decade when factoring in both direct costs and associated interest.
Meanwhile, U.S. Treasury Secretary Scott Besant announced on Wednesday an extension of emergency cash management measures to prevent breaching the federal debt ceiling, pushing the deadline by nearly a month to July 24.
This continuous cycle of debt accumulation, political wrangling over tax legislation, and extraordinary fiscal maneuvers by the Treasury reflects the complexity of the challenges facing the U.S. in managing the sustainability of its national debt. But how does this mounting debt affect the U.S. economy and the government’s performance?
1. What Is the National Debt?
As of now, the U.S. national debt totals $36.2 trillion, with the Treasury updating this figure down to the last cent daily. Debt levels remained relatively stable until the early 2000s but began rising sharply after President George W. Bush enacted tax cuts in 2001. Months later, the U.S. faced the 9/11 attacks and entered prolonged wars in Iraq and Afghanistan, largely financed through deficit spending.
Subsequent domestic policies also increased the debt, including economic stimulus programs following the 2008 global financial crisis and the extension of Bush-era tax cuts. President Trump’s massive 2017 tax cut package, followed by enormous federal spending during the COVID-19 pandemic under both Trump and President Joe Biden, caused sharp jumps in government spending—most of it funded through borrowing.
2. How Is the National Debt Measured?
Policymakers often evaluate debt as a percentage of Gross Domestic Product (GDP)—the total annual economic output of the country. A strong and growing GDP indicates the government’s capacity to repay debt and borrow more when needed. However, a rising debt-to-GDP ratio may signal future difficulty in repaying debt.
Economists are concerned about the uncertainty of when this point may be reached. Most countries cannot sustain the debt levels that the U.S. currently manages. Because much of the global economy depends on the dollar, the U.S. enjoys greater borrowing flexibility. But if lenders lose confidence in the U.S. government’s repayment ability, they may hesitate to extend further credit—potentially triggering serious global economic consequences.
The previous peak in the debt-to-GDP ratio was after World War II, during a period of rapid economic expansion. According to the Congressional Budget Office (CBO), the U.S. is projected to surpass that record by 2027.
3. What Makes Up the National Debt?
Federal spending falls into two categories: discretionary and mandatory spending.
Discretionary spending includes funding for federal agencies such as the Departments of Defense, Education, Homeland Security, and Health Services. It must be approved annually by Congress and signed by the president.
Mandatory spending includes programs like Social Security, Medicare, Medicaid, and veterans’ healthcare.
4. What Is Mandatory Spending?
Mandatory spending constitutes the largest share of the annual federal budget. It supports millions of Americans through programs like Social Security, Medicare, Medicaid, and anti-poverty initiatives such as SNAP (formerly known as food stamps).
Due to its essential role in citizens' lives, efforts to reduce the deficit often prove politically unpopular, as they frequently target critical social safety nets.
5. How Has the Debt Grown—or Shrunk?
The $36.2 trillion national debt reflects the accumulation of annual deficits—the gap between government revenue (taxes and fees) and spending. For much of the 20th and 21st centuries, the U.S. has run annual deficits. Economists argue this is not inherently bad, as borrowing enables governments to invest in growth and distribute the cost of major programs over time, much like taking out a mortgage or a business loan.
6. How Have Democratic and Republican Presidents Handled the Debt?
Annual deficits accumulate over time, and debt reduction has rarely been a top policy priority. The last time the U.S. government collected more revenue than it spent was between 1998 and 2001, when President Bill Clinton and a Republican-led Congress enacted social welfare reforms. From that time until 2024, Democrats and Republicans each governed for about the same number of years. During that period, Republicans increased the debt by $7.6 trillion, while Democrats added around $15 trillion.
7. Who Lends Money to the U.S.?
There are two types of national debt: public debt and intragovernmental debt.
Public debt refers to the money borrowed from individuals and institutions that purchase government bonds. Intragovernmental debt involves borrowing by the Treasury from funds like Social Security, which must be repaid with interest.
8. Which Countries Hold U.S. Debt?
Economists primarily focus on the publicly held debt, as it's the main source for financing deficits. Foreign governments, companies, and individuals can also purchase U.S. debt, which offers several benefits.
First, the U.S. is the world’s largest economy with a strong history of repaying its obligations, making Treasury bonds a reliable investment—even though credit rating agency Moody’s downgraded the U.S. government’s rating last month.
Second, when countries trade with the U.S., they receive payment in dollars. Instead of converting these to other currencies, it's often easier for central banks to reinvest them into U.S. Treasury securities.
Third, holding U.S. debt serves diplomatic purposes. The U.S. has an interest in maintaining strong ties with its creditors, and buying Treasury bonds helps reinforce those relationships.
9. How Does Some Debt Lead to More Debt?
As national debt increases, the U.S. must pay more to maintain its borrowing ability, which happens in two ways:
Higher Interest Payments: For example, 2% interest on $100 equals $2, but on $1,000, it equals $20.
Rising Interest Rates: As debt grows, investors demand higher yields, driving up interest rates. A 2% rate in 2013 has risen above 4% today to attract lenders.
Global economic trends also heavily influence interest rate shifts.
10. What Are the Consequences of Rising National Debt?
As debt increases, interest payments consume a larger share of the federal budget, reducing funds available for other priorities.
In fiscal year 2024, the U.S. government spent more on servicing the debt than it did on the Department of Defense—or even the combined costs of Veterans Affairs, Education, refundable tax credits, and anti-poverty programs.
As interest obligations rise, fewer financial resources remain for critical public investments.
—(Agencies)
