America’s national debt has just crossed a threshold that, a few years ago, seemed unthinkable. In the week of August 11-14, 2025, the U.S. national debt soared past $37 trillion, smashing through projections that pegged this milestone for sometime after 2030. This rapid ascent—fueled by pandemic-era borrowing, expanded social programs, and a series of tax changes—has left policymakers, economists, and everyday Americans alike wondering: how did we get here so quickly, and what comes next?
According to The Economic Times, it took the U.S. more than two centuries to accumulate its first $1 trillion in debt, a milestone reached in 1981. Now, the nation is adding that much every five months. The Congressional Budget Office’s 2020 forecast had suggested the $37 trillion mark wouldn’t be reached until after 2030, but a combination of crisis spending and rising entitlement costs accelerated the timeline by at least five years. The current debt now exceeds the entire U.S. economy, which stands at $30.3 trillion, with the debt-to-GDP ratio climbing to 119.4%—not far off the 2020 record of 132.8%.
Chairman Jodey Arrington (R-Texas), who leads the House Budget Committee, put the numbers in stark perspective: “When my son was born in 2011, the national debt was $15 trillion. Now, 14 years later, it exceeds the GDP of the other five largest economies combined.” He continued, “Today, we spend nearly $1 trillion a year just to pay the interest on our debt—more than we spend on our entire national defense or Medicare benefits for our seniors. This is the predictable and perilous result of decades of fiscal mismanagement in Washington.”
Indeed, interest payments have become the fastest-growing line item in the federal budget. The Economic Times reports that in fiscal 2024, net interest costs reached $879.9 billion, surpassing spending on both Medicare ($874.1 billion) and defense ($873.5 billion). With the Federal Reserve’s interest rate hikes, the average rate on federal debt has more than doubled—from 1.556% in January 2022 to 3.352% by July 2025. The Congressional Budget Office projects that if nothing changes, America’s debt could balloon to $150 trillion by 2055.
In response, President Trump’s administration has rolled out a series of initiatives aimed at tackling the deficit. According to Fortune, Trump’s plan hinges on a mix of tariffs, cost-cutting, and pro-growth programs. The Department of Government Efficiency (DOGE) claims to have saved $202 billion from government spending, which comes out to about $1,254.66 per taxpayer. Yet, with debt per capita sitting at over $108,000, it’s clear there’s a long road ahead.
One of the most headline-grabbing policies has been Trump’s aggressive use of tariffs. Customs duties have surged, with The Economic Times noting a 273% year-over-year jump in July 2025, bringing in roughly $21 billion for that month alone. The White House touts these revenues as a fiscal win, with deputy press secretary Kush Desai telling Fortune, “America’s debt-to-GDP ratio has actually declined since President Trump took office—and as the administration’s pro-growth policies of tax cuts, rapid deregulation, more efficient government spending, and fair trade deals continue taking effect and America’s economic resurgence accelerates, that ratio will continue trending in the right direction.”
But critics argue the impact is, at best, limited. Michael A. Peterson, CEO of the Peter G. Peterson Foundation, warned, “During a time of economic growth, it is highly irresponsible to run deficits this large … At this pace, we will run through the recent $5 trillion debt limit increase—the largest in history—in just two years. We are no longer in a Great Recession or a global pandemic, but our fiscal policy keeps acting like we are.” Peterson added, “As our debt continues to rise, at some point the financial markets will lose confidence in our ability to overcome the politics to solve this problem. International lenders are watching, and all three ratings agencies have now downgraded U.S. credit.”
And while tariff revenue has more than tripled—from about $7 billion in 2024 to $25 billion by late July 2025—the numbers reveal a sobering reality. Even if every penny of current tariff revenue were applied to the national debt, it would take nearly 120 years to pay off $37 trillion, according to Fortune. Meanwhile, the deficit continues to balloon: the U.S. ran a $291 billion deficit in July 2025 alone, up nearly 20% from the previous year, and the fiscal 2025 deficit has already reached $1.629 trillion, a 7% rise from 2024.
The “One Big Beautiful Bill Act” (OBBBA), a centerpiece of Trump’s fiscal strategy, aims to rebalance the debt-to-GDP ratio by boosting economic growth. The White House projects that the ratio, currently at about 121% (down slightly from 122% in late 2024), will fall to 94% as the bill generates new economic activity. Yet, the Congressional Budget Office estimates that the OBBBA will add $3 trillion to the deficit between 2025 and 2034, and Trump’s so-called “megabill” is forecast to add nearly $3.4 trillion in new deficit spending over the next decade, even as it raises the federal debt ceiling by $5 trillion to $41.1 trillion.
Who actually owns America’s debt? As The Economic Times details, private investors hold about two-thirds of it ($24.4 trillion), while federal trust funds like Social Security and Medicare own $7.3 trillion, and the Federal Reserve holds $4.6 trillion in Treasuries. Foreign ownership remains significant: Japan leads with $1.1 trillion, followed by the U.K. ($809.4 billion) and China ($756.3 billion). Mutual funds, pension funds, banks, and state governments also hold substantial portions.
For most Americans, these numbers can feel abstract—until they start to hit home. Higher debt can drive up mortgage rates, credit card interest, and even threaten the stability of the U.S. dollar. Tariffs, meanwhile, can mean higher prices on everything from smartphones to home appliances. Economist Wendy Edelberg of the Brookings Institution cautioned, “This kind of debt growth is not sustainable without crowding out investment and pushing borrowing costs higher.” Chad Bown of the Peterson Institute for International Economics added, “You might get a sugar high in revenue, but the long-term diet is less healthy,” warning that tariffs ultimately act as a tax on consumers and businesses, potentially slowing economic growth and dampening other tax receipts.
As the 2026 midterm elections approach, fiscal policy is poised to become a defining battleground. Trump is betting that voters will see tariffs as a tool of economic nationalism and revenue recovery. Democrats, on the other hand, argue the policy is a hidden tax and that runaway deficits risk undermining the economy’s resilience. With debt climbing and deficits persisting despite record tariff revenues, the U.S. is entering uncharted territory—one where fiscal discipline and political will may soon be tested as never before.
America now faces a pivotal moment: whether to chart a new course on fiscal policy or continue down a path that, for many, feels increasingly unsustainable.
