The US national debt passed another grim milestone this past week when government debt held by the public — the most conservative way to measure what is owed — surpassed America’s total annual economic output.
As of this past Tuesday, government debt held by the public is about $31.27 trillion, according to the US Treasury. Meanwhile, the US nominal gross domestic product (GDP) from April 1, 2025, to March 31, 2026, was an estimated $31.22 trillion, according to new Commerce Department data released last week.
That imbalance is expected to worsen in the years ahead, with the US firmly on track to break the all-time record of a 106% debt-to-GDP ratio set in 1946 after World War II.
Already in this fiscal year, which began last October, the US has spent $1.17 trillion more than it has collected, according to the federal government, with the annual deficit projected to grow to nearly $2 trillion in the coming months.
The Congressional Budget Office foresaw this new milestone earlier this year in its budget and economic outlook. The group projects that, without major policy changes, the ratio of federal debt held by the public to GDP will rise further to 120% in 2036 and 175% by 2056.
A main driver of the surging debt, the CBO noted, is increased spending on programs like Social Security and Medicare as the population ages, not to mention interest payments on the debt itself.
Interest on the national debt has grown sharply, exceeding defense spending in fiscal year 2024.
Interest on the debt currently makes up 14% of US government spending. Put another way, over 1 in 7 dollars spent by the federal government is to service the debt.
The latest in many ‘alarm bells’
Maya MacGuineas is the president of the budget watchdogs at the Committee for a Responsible Federal Budget. She said in a statement that “we’ve heard plenty of alarm bells in the past few years about our fiscal path, but this one rings especially loudly.”
She blamed the situation on “a total bipartisan abdication of making hard choices.”
The current debt-to-GDP ratio is about twice historic averages, while other measures of the debt to output passed 100% long ago.
The gross national debt as of this week is at about $38.95 trillion — or well over 120% of America’s GDP.
That measure of “Total Public Debt Outstanding” is the more often-cited measure of the national debt. It includes what is known as intra-governmental holdings, or money one part of the government owes another.
The Trump administration has downplayed the ballooning debt since taking office, often saying that the debt-to-GDP ratio will drop as President Trump’s policies accelerate US economic growth.