Trump just shattered an economic record — and it's catastrophic

U.S. President Donald Trump reacts as he holds a cabinet meeting at the White House in Washington, D.C., U.S., April 30, 2025. REUTERS/Evelyn Hockstein

Under President Donald Trump, the United States national debt crossed $39 trillion for the first time as of Tuesday — meaning that it has grown by $1 trillion since it reached $38 trillion for the first time in late October.

This pace of accumulation is universally regarded as “unsustainable” by budget watchdogs and academic economists alike, wrote Fortune's business editor Nick Lichtenberg on Wednesday.

“The milestone, confirmed in Wednesday’s Daily Treasury Statement, lands amid a politically charged moment: it comes roughly two weeks before the ten-year anniversary of President Trump’s 2016 campaign promise to eliminate the national debt within eight years,” Lichtenberg wrote. “Instead, the gross national debt has roughly doubled since Trump first took office—it was $19.9 trillion in January 2017.”

Even worse, Lichtenberg cited a Peterson Foundation study which projects the debt will exceed $40 trillion before the 2026 midterm elections.

“Perhaps the most alarming dimension of the crossing is what it costs just to carry the debt,” Lichtenberg said. “Net interest payments on the national debt are projected to exceed $1 trillion in fiscal year 2026—nearly triple the $345 billion in interest the government paid in 2020, at the onset of the pandemic. In the first three months of the current fiscal year alone, net interest payments reached $270 billion, already surpassing the nation’s defense spending for the same period.”

Kent Smetters, director of the Penn Wharton Budget Model and described by Fortune as “one of the nation’s foremost fiscal economists,” argued that the actual debt number that matters is the amount held by the public, which is $31.3 trillion rather than $39 trillion. Even so, Smetter added “the fact that debt held by the public has now exceeded $31 trillion is not great.

He added, “The real problem is that we are on an upward debt path that is unsustainable.”

Economist Michael Peterson of the Peterson Foundation, meanwhile, told Fortune that “America faces complex and critical challenges, both at home and abroad, and putting our debt on a sustainable path will support a stronger, more secure future.” Writing for The Washington Post on Wednesday, conservative columnist George F. Will warned that “at our current pace of profligacy — it probably will accelerate — three trillion-dollar milestones can be passed during one fiscal year. The Congressional Budget Office projects that in 10 years, the nation will annually be spending more than $2 trillion (two thousand billion) just on debt service, which already is the fastest-growing part of the budget. The national debt will exceed $40 trillion by the end of October, the Peterson Foundation projects."

One factor significantly exacerbating the deficit is Trump’s recently-declared war against Iran. The Intercept reported on Tuesday that the war is so far costing $1 to $2 billion every day, meaning the conflict could cost $250 billion if it lasts a few months.

“If this war takes months rather than weeks, the costs will become astronomical,” Gabe Murphy, a policy analyst at the nonpartisan budget watchdog group Taxpayers for Common Sense, explained to The Intercept.

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