A deeply troubling threshold has been crossed. In recent weeks, the national debt (debt held by the public) of the United States has exceeded our gross domestic product (GDP). In other words, we owe more than we produce. This is the first time since World War II that national debt has exceeded GDP.
I’m guessing you haven’t heard anything about it, since neither of our political parties seems the slightest bit interested.
The U.S. incurred massive federal debt during World War II to, literally, save the world. Today, we’re doing it to protect sugar farmers from competition so they can pollute the Everglades, so that transgender prisoners can get taxpayer subsidized gender surgery, and so that people who don’t want to work can live off taxpayers through welfare and disability programs.
Not quite as noble a cause.
Our debt is increasing because we spend more than we take in—a lot more.
For fiscal year 2026, the Congressional Budget Office projects a total deficit of $1.9 trillion, with $7.4 trillion in outlays and $5.6 trillion in revenues. That means the federal government is spending roughly one-third more than it takes in. Map that onto your personal finances and see if you can sleep at night.
All other things being equal, you’d like to be the country that dictates terms to the rest of the world. The United States gets to do that because of the size and strength of our economy. It gives us room to maneuver, and the ability to exert leverage on other countries. It funds a powerful military. History demonstrates that a U.S.-led world order is the best world order. It’s something no one can take from us, but it’s something that we ourselves can abandon.
We know this can’t go on without causing problems. Arguably, it already is, since interest on the debt is now larger than our defense budget, and larger than Medicare. The only federal budget item larger than interest on the debt is Social Security outlays—but at the pace we are going, interest payments will surpass Social Security as well. The opportunity cost of spending $1 trillion a year in interest alone is staggering.
If [something] can’t go on forever, it will stop. Economist Herb Stein wrote this in the Wall Street Journal in May 1985. Obviously, the debt has become dramatically larger since then, both in real terms and as a percent of GDP. When will the size of U.S. debt become a real problem? Stein almost certain thought it would have long before now. The truth is, we don’t know when. But these things tend to sneak up on you.
In Hemmingway’s “The Sun Also Rises,” Mike Campbell is asked about his money troubles:
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
Ahead of us on the highway, we know the bridge is out. We don’t know where, but we are speeding heedlessly toward it.