US debt hits historic $38 trillion mark as fiscal concerns mount

The United States’ gross national debt has surpassed a historic milestone, topping $38 trillion for the first time as of October 21, new Treasury Department data revealed. This latest surge comes just two months after the debt crossed the $37 trillion mark in mid-August and less than a year after breaking the $36 trillion threshold last December.

The rapid acceleration in debt accumulation has alarmed fiscal experts, especially amid the ongoing government shutdown that has left hundreds of thousands of federal workers unpaid. Government shutdowns can exacerbate debt growth by delaying economic activity and fiscal decisions, as well as increasing costs due to pausing and restarting federal programs. The Office of Management and Budget estimated that the 2013 shutdown alone cost $2 billion in lost productivity, New York Post reports.

Michael A. Peterson, CEO of the nonpartisan Peter G. Peterson Foundation, emphasized the severity of the situation: “Reaching $38 trillion in debt during a government shutdown is the latest troubling sign that lawmakers are not meeting their basic fiscal duties.” He added, “If it seems like we are adding debt faster than ever, that’s because we are. We passed $37 trillion just two months ago, and the pace we’re on is twice as fast as the rate of growth since 2000.”

The growing debt is driven by multiple factors, including demographic shifts with an aging population increasing Social Security and Medicare enrollments, as well as rising interest costs on the debt itself. Interest expenses have ballooned due to higher interest rates aimed at curbing inflation and the expanding debt burden. Peterson noted that the US has spent about $4 trillion on debt servicing over the last decade and is projected to spend $14 trillion in the next ten years, a cost that “crowds out important public and private investments in our future.”

The federal government ran a roughly $1.8 trillion budget deficit for the fiscal year ending September 30. The Congressional Budget Office (CBO) projects that public debt will rise from about 100% of GDP in 2025 to 120% by 2035. Over that period, annual deficits are expected to reach $2.6 trillion, adding $22.7 trillion to the national debt. Net interest payments alone are forecast to climb from $1 trillion this year to $1.8 trillion in 2035.

Fiscal experts warn that the ballooning debt threatens economic stability. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, criticized the political deadlock: “We fail to pass budgets, we blow past deadlines, we ignore fiscal safeguards... Social Security and Medicare, for example, are just seven years from having their trust funds depleted — and you don’t hear anything from our political leaders on how to avoid such a disaster.”

The rising debt also risks undermining consumer purchasing power through inflation. Kent Smetters, professor of business economics at the University of Pennsylvania, said, “That additional inflation compounds and erodes consumers’ purchasing power.”

Despite these warnings, the Trump administration asserts progress in fiscal management. Treasury Secretary Scott Bessent noted that from April to September, the federal deficit totaled $468 billion — the lowest since 2019. “During his first eight months in office, President Trump has reduced the deficit by $350 billion compared to the same period in 2024 by cutting spending and boosting revenue,” White House spokesman Kush Desai said, adding that efforts are underway to promote economic growth, reduce inflation, and eliminate wasteful spending.

By Vafa Guliyeva