News about the national debt hit the headlines after Moody’s downgraded the U.S. credit rating. People don’t seemed concerned about the national debt. Does it really matter?
Money Metals’ Midweek Memo podcast host Mike Maharrey warns that it matters a lot.
“This is a subject that tends to elicit shrugs,” said Maharrey last spring.
“I get that too. People have been sounding alarms about the debt all of my adult life – and I’m not young. People assume, well, it hasn’t caused a problem yet, so it probably won’t. Meanwhile, you have the modern monetary theory crowd running around claiming that the U.S. can pretty much borrow all it wants because of the reasons. They use accounting tautologies to prove it.”
“And you know, I guess it’s not a problem…until it is.”
“You’ve probably heard me use this analogy. They are playing a game of kick the can down the road. The question is: how long is the road?”
America’s growing national debt has transformed itself from a relatively remote political issue into a pressing, long-term threat. The U.S. government is today running huge deficits even beyond times of great national emergency, with its total debt and annual interest payments rising at an alarming rate—a warning that the fiscal pressure is becoming increasingly difficult to ignore.
The national debt is no longer a future problem—it is consuming today’s budget, draining more money into interest payments and leaving less for the programs, services, and economic investments Americans rely on.
The Treasury’s “Debt to the Penny” data showed total outstanding public debt of $32.27 trillion on August 18, 2026—but note that this dataset’s figure reflects a specific Treasury accounting measure and date. The federal debt is split between debt held by the public and intragovernmental holdings, such as Treasury securities held by federal trust funds.fiscaldata.treasury. In simple terms, debt held by the public is projected to become larger than the entire annual U.S. economy.
Who’s the Blame?
Through the years, Republicans and Democrats are jointly responsible for creating this situation; each party has supported increasing levels of spending and/or decreasing income tax rates/programs without sufficient funding. However, the present Administration has dramatically increased the downward trend. President Trump’s 2025 “One Big Beautiful Bill” resulted in federal revenue being lowered much greater than federal spending was reduced. According to estimates by the Congressional Budget Office, this bill will increase federal deficits by an estimated $3.4 trillion (or approximately $4.1 trillion when considering the added interest) during the first ten years of implementation.
President Trump has overseen one of the fastest and largest debt buildups in modern U.S. history, especially when measured per year in offic. He has increased projected national debt mainly via his large tax cuts, extending tax provisions, approving COVID-era relief spending, and signing the 2025 reconciliation package.
The US National Debt has climbed to an unbelievably high $40,000,000,000,000.
— Pubity (@pubity) August 20, 2026
At the end of fiscal year 2020, that number was only $26 trillion. pic.twitter.com/lVRZ5hH9ma
Fact: The headline “national debt” is not all owed to foreign governments. A large portion is held by Americans and U.S.-based institutions, including investors, mutual funds, banks, pension funds, and the Federal Reserve; another portion consists of debt the government owes to its own accounts, including trust funds.
And while his tariffs bring in new federal revenue and are estimated to reduce deficits by about $3 trillion, they do not fully offset the broader cost of his tax and spending policies.
“Quite frankly, I think the debt issue will have far more impact on the economy in the long run than tariff policy,” said Maharrey. My guess is a lot of this will be resolved with negotiations, and when it’s all said and done, the tariff landscape won’t be substantially different than when it was when Trump took office. In other words, they’ll resolve the tariff problem.
“They ain’t gonna resolve the debt, ladies and gentlemen.”
The balanced takeaway: Trump’s actions have added significantly to projected debt, but he is not solely responsible. Congress, bipartisan pandemic spending, long-term entitlement costs, and rising interest rates have also driven the national debt higher.
Fact: As of August 2026, Reuters reported debt had increased about $11.6 trillion across Trump’s two nonconsecutive terms so far: $7.8 trillion in his first term and about $3.8 trillion since he returned in January 2025. This makes his cumulative total larger than Obama’s, but Trump’s second term is not complete and the result depends on the start/end dates and whether one measures gross debt or debt held by the public.
Economic Risks Facing the Average American
The average American may experience higher costs associated with obtaining mortgages, automobile loans, credit card financing and/or small-business loans. A significant increase in federal borrowing could also make it more difficult to grow a small business or create employment opportunities. In addition, it creates an atmosphere where Congress may be forced into making difficult and potentially very unpopular decisions i.e. raise taxes, decrease program funding, reduce benefit levels, reduce services provided by the federal government, or simply take on additional debt.
Fact: The risk is not necessarily an overnight default. The more likely danger is a long squeeze: higher interest costs, more expensive credit, reduced room for federal priorities, and eventually sharper fights over taxes, spending, and benefits. CBO’s outlook warns that interest costs and major mandatory programs are driving a growing share of federal outlays.
| Debt pressure | Potential effect on Americans |
|---|---|
| Higher Treasury borrowing | Can push borrowing costs higher across the economy |
| Rising interest costs | Less federal money available for other priorities |
| Larger deficits | Can add to inflation concerns if demand outpaces supply |
| Fiscal uncertainty | Can weaken business confidence and investment |
| Future budget cuts or tax hikes | Can affect benefits, public services, and household finances |
| Reduced crisis capacity | Makes recessions, wars, disasters, or banking shocks harder to manage |
The largest fear is that there would be a “confidence shock”. If investors are demanding much larger premiums for lending money in order to allow the U.S. government to borrow money as it has been doing — and if these increased borrowing costs were to trickle down through the rest of the economy — they could cause the cost of borrowing throughout the entire economy to explode and turn what was once viewed as a manageable fiscal crisis into an all-out fiscal disaster. This represents probably the biggest red flag regarding our continued accumulation of a mounting debt burden.
… So, while the national debt will not bring about the downfall of the United States over night, each passing year reduces the likelihood that we will avoid the inevitable consequences of our actions.
