U.S. National Debt Surpasses $37 Trillion as Fiscal Risks Escalate

WASHINGTON, Oct. 10, 2025 — The United States’ national debt has surpassed $37 trillion, a staggering figure that reflects the nation’s ongoing fiscal challenges. This milestone was reached earlier than expected as borrowing continued to grow. The debt has more than doubled in the past 15 years, driven by a combination of tax cuts, increased spending, and economic crises.

In 2020, the COVID-19 pandemic prompted massive government spending to support the economy. Stimulus packages, unemployment benefits, and healthcare expenditures led to a sharp rise in the deficit. While these measures were necessary to mitigate the immediate economic fallout, they significantly contributed to the growing debt.

Subsequent administrations continued to implement policies that added to the national debt. Tax cuts, such as those enacted in 2017 and again in 2025, reduced federal revenue without corresponding cuts in spending. Additionally, increased spending on entitlement programs like Social Security and Medicare, along with rising interest payments, further strained the federal budget.

What are the Implications?

The implications of a $37 trillion national debt are profound and multifaceted. One immediate concern is the cost of servicing the debt. Interest payments have become the fastest-growing part of the federal budget, consuming an increasing share of taxpayer dollars. This trend is expected to continue, potentially crowding out funding for other essential services and investments.

Moreover, the high debt level could impact the nation's credit rating. In 2023, Fitch Ratings downgraded the U.S. credit rating from AAA to AA+, citing concerns over the government's fiscal trajectory. A lower credit rating can lead to higher borrowing costs, exacerbating the debt problem.

The debt also poses long-term economic risks. High levels of borrowing can lead to higher interest rates, which may dampen private investment and economic growth. Additionally, the growing debt burden could limit the government's ability to respond to future economic crises, reducing fiscal flexibility.

Can the Debt Be Managed?

Managing the national debt requires a balanced approach that includes both reducing deficits and fostering economic growth. Policymakers face the challenge of addressing the structural drivers of debt, such as entitlement spending and defense expenditures, while also promoting policies that stimulate economic activity.

Revenue Measures: One potential strategy is comprehensive tax reform aimed at increasing federal revenue without stifling economic growth. This could involve closing loopholes, broadening the tax base, and ensuring that the tax system is equitable and efficient.

Spending Controls: Simultaneously, controlling spending is crucial. This may involve reevaluating entitlement programs to ensure their long-term sustainability and considering reforms in defense and other discretionary spending areas. However, such measures often face political resistance and require careful consideration to avoid unintended consequences.

Investor Perspectives

The growing debt carries implications beyond government budgets. Investors watch interest rates, bond yields, and market stability closely. The rising debt could increase borrowing costs and affect investment decisions, potentially influencing retirement funds, corporate financing, and financial planning.

Analysts also note that how the government addresses its fiscal challenges will signal broader economic priorities. Decisions on revenue, spending, and debt management are closely monitored because they influence investor confidence and the nation's creditworthiness.

A careful balance is essential. While immediate fiscal interventions can provide stability, long-term economic health depends on structural reforms and sustainable policies. Investors and policymakers must handle these challenges thoughtfully to maintain confidence in the U.S. economy.

The national debt now exceeds $37 trillion, with interest payments becoming the fastest-growing part of the federal budget.

Inputs from Diana Chou

Editing by David Ryder