(Mike Maharrey, Money Metals News Service) On August 11, the national debt officially topped $37 trillion for the first time.
It took a little longer to hit this milestone. It only took 188 days for the debt to grow from $35 trillion to $36 trillion. It took another 265 days to reach $37 trillion.
But don’t be fooled – the growth of the debt didn’t slow down.
The federal government ran up against the debt ceiling on January 1. As a result, the federal government couldn’t borrow any money until the enactment of the “Big Beautiful Bill,” which raised the debt ceiling by $5 trillion as of July 1.
At that time, the national debt stood at $36.2 trillion. It took less than two months for the federal government to borrow more than $800 billion, pushing the debt over $37 trillion.
The growth of the national debt is increasing at an exponential rate. In 2020, the Congressional Budget Office (CBO) projected that the debt wouldn’t hit $37 trillion until 2030.
Putting the growth in context, the national debt hit $34 trillion in January 2024 and $35 trillion in November 2024.
Going back a little further, when Congress effectively eliminated the debt ceiling on June 5, 2023, the national debt stood at $31.46 trillion. Since then, the Biden administration has added $4.54 trillion to the national debt. That’s in just 18 months for those of you keeping track at home.
This isn’t shocking when you realize Uncle Sam is blowing through about half a trillion dollars every single month.
And federal spending isn’t going to slow down anytime soon.
The Big Beautiful Bill “cut” some spending but increased it in other areas. Furthermore, those “cuts” were from projected spending increases. Actual spending will still go up, just not as fast as originally planned. The bottom line is that even with the Big Beautiful Bill, spending will increase on an absolute basis. The CBO estimates the legislation will result in an additional $4.1 trillion budget deficit over the next decade. That will have to be covered by additional borrowing, further accelerating the growth of the national debt.
To be fair, this isn’t just a Trump problem. Every president since Calvin Coolidge has left the U.S. with a bigger national debt than when he took office.
The National Debt in Perspective
It’s hard to fathom $37 trillion. What does that even mean?
Here’s some perspective.
Every U.S. citizen would have to write a $108,509 check to pay off the debt.
Of course, a lot of people don’t pay taxes. That means the taxpayer burden is much higher. Every U.S. taxpayer would have to write a check for $323,053 to wipe out the debt. And that’s on top of the taxes we already pay!
Looking at it another way, $37 trillion is more than the annual GDP of China, Germany, India, Japan, and the UK combined.
It’s hard to wrap your head around how big 1 trillion is, much less 37 trillion. Here are a few factoids to help you visualize just how big that number is:
- There are 1 million seconds in 11.5 days. A trillion seconds is about 32,000 years.
- If you could say one number every second, it would take about 11.5 million days to count to 1 trillion.
- If you had spent $1 million every day since the birth of Christ, you still wouldn’t have spent $1 trillion.
- If you line up dollar bills end-to-end, you could go to the moon and back around 203 times with $1 trillion. You could wrap them around the Earth about 3,893 times.
- If you stacked up 1 trillion dollar bills, the dollar tower would rise to 67,866 miles.
- If a cup of coffee costs $3, you could buy 333 billion cups of coffee with $1 trillion.
- If you had 1 trillion dollars, you could give every person on Earth approximately $125.
- One trillion grains of rice would weigh about 20,000 metric tons.
Keep in mind that all these examples illustrate the size of $1 trillion. The national debt is 37 times that number.
So What?
I consistently report on budget deficits and the growth of the national debt, but the truth is, most people don’t really care.
In fact, a lot of people are under the illusion that the debt doesn’t matter.
James Madison disagreed. He called public debt “a public curse, and in a Rep. Govt. a greater than in any other.
Thomas Jefferson also disagreed. He called public debt “the greatest of dangers to be feared.”
So did George Washington.
“No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt. On none can delay be more injurious or an economy of time more valuable.”
But why does it matter?
In the first place, large government debts put a drag on economic growth. According to the national debt clock, the current debt level represents 123.3 percent of the GDP. Studies have shown that a debt-to-GDP ratio of over 90 percent retards economic growth by about 30 percent.
Even more concerning is the fact that at some point, the world will decide it’s no longer interested in financing the U.S. government’s borrowing and spending.
And as the Bipartisan Policy Center points out, the growing national debt and the mounting fiscal irresponsibility undermine the dollar.
“Confidence in U.S. creditworthiness may be undermined by a rapidly deteriorating fiscal situation, an increasing concern with federal debt set to grow substantially in the coming years.”
This appears to already be happening. Demand for U.S. Treasuries is sagging, and yields are rising. That means it costs more for the federal government to service the massive debt.
Interest on the national debt cost $91.9 billion in July alone. That brought the total interest expense for the fiscal year to $1.01 trillion, up 6 percent over the same period in 2024.
So far, in fiscal 2025, the federal government has spent more on interest on the debt than it has on national defense ($758 billion) or Medicare ($823 billion). The only higher spending category is Social Security ($1.31 trillion).
It’s quite possible that the Fed won’t be able to lower federal borrowing costs with even with deeper interest rate cuts.
Ultimately, the federal government needs the Fed to step in and put its big fat thumb on the bond market. That would mean a return to quantitative easing (QE).
In QE operations, the central bank buys Treasuries on the open market. This increased (artificial) demand drives bond prices higher and puts downward pressure on yields. This would be an ideal scenario for the U.S. government. It needs all the help it can get to facilitate its borrow/spend addiction.
But the Fed runs QE operations with money created out of thin air. The new money gets injected into the monetary system and the economy. This is, by definition, inflation.
People seem unconcerned about the growing debt because people have warned about it for decades, and the promised crisis hasn’t occurred – yet.
But the bottom line is that just because the debt hasn’t caused a crisis doesn’t mean it won’t. After all, things happen slowly and then all at once.
