U.S. Debt Hits $37 Trillion: Are We Near the Breaking Point?

The United States has crossed a milestone that experts have long warned about: the national debt has reached $37 trillion, years ahead of projections. According to the Treasury Department’s latest report, this record figure reflects an unprecedented pace of borrowing and has set off alarm bells among economists, policymakers, and financial watchdogs. Some analysts believe the economy has now entered dangerous territory, while others argue the collapse threshold has shifted upward due to recent inflationary trends.

Why the Debt Grew So Fast

The Congressional Budget Office had once projected that $37 trillion in debt would not be reached until after 2030. Instead, it arrived five years early. The rapid climb began during the COVID-19 pandemic, when the government borrowed heavily to stabilize the economy under both Presidents Donald Trump and Joe Biden. Additional debt has piled on in recent years from new tax cuts and spending measures, including a Republican-led package signed by Trump earlier this year, estimated to add $4.1 trillion over the next decade.

Michael Peterson, CEO of the Peter G. Peterson Foundation, called the situation “highly irresponsible” given that the economy is currently in a period of growth. He warned that massive borrowing puts upward pressure on interest rates, which “adds costs for everyone and reduces private sector investment.”

Why Experts Say This Is a Huge Problem

Debt at this level is more than just a number on a government balance sheet. According to the Government Accountability Office, it can mean higher borrowing costs for mortgages and car loans, lower wages due to reduced business investment, and higher prices for goods and services.

Wendy Edelberg of the Brookings Institution says that Congress has essentially locked in years of additional borrowing. “We’re going to borrow a lot over the course of 2026, we’re going to borrow a lot over the course of 2027, and it’s just going to keep going,” she warned.

Peterson pointed out the alarming speed of the debt climb: “We are now adding a trillion more to the national debt every 5 months — more than twice as fast as the average rate over the last 25 years.”

The Threshold Debate: Is $35 Trillion Still the Red Line?

Many seasoned economists and market analysts had previously pegged $35 trillion as the upper limit before the U.S. economy risked a meltdown. The reasoning was that at that level, debt service costs, interest rate pressures, and market fears would converge into a crisis. However, the massive inflation during the Biden years – while damaging to households and eroding purchasing power – also effectively raised that limit.

With the dollar’s real value diminished, some believe the danger point has shifted closer to $40 trillion. That breathing room may prove temporary, and some analysts warn that the delayed reckoning could manifest as runaway inflation that the Federal Reserve might not be able to control.

Trump’s View: Lower Rates to Relieve Debt Pressure

Former President Trump has argued that lowering the Federal Reserve’s interest rate would ease the pressure of servicing such a massive debt. Lower rates would reduce government borrowing costs, potentially slowing the debt spiral, while also giving the economy more room to grow. Critics counter that cutting rates too soon could feed inflation – the very problem that could trigger the crisis experts fear.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, hopes the milestone shocks lawmakers into action. “We need to do something, and we need to do it quickly,” she said.

Meanwhile, global investors and credit agencies are watching closely. All three major ratings agencies have already downgraded U.S. credit, signaling that the world’s confidence in America’s fiscal discipline is slipping.

Whether $37 trillion marks the edge of the cliff or just another step toward a higher threshold, the warnings are clear: the debt is growing faster than at any point in modern history, and the political will to slow it remains elusive. As Peterson put it, “The question is: how many more trillions will we add before we decide to stop?”

If the experts are right, the answer could determine whether America faces a slow economic decline or a sudden and painful reckoning.

FAM Editor: It is actually surprising that Trump has been working to reduce the deficit, since it was not really a campaign promise. It is heartening, but will Trumps measures of lowering the Fed rate, cutting government costs, and adding tariff revenues to the coffers be enough to stem the flow of debt?

Inflation kills. And just because our inflation rate is low does not mean we are immune from the damage of a higher and higher national debt, with interest payments that will soon be higher than our military budget.

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