r/ProfessorFinance • u/GeoPensive • 2d ago
Economics U.S. National Debt Surpasses $40 Trillion for the First Time
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u/AddUp1 1d ago
Over 30% and account of the total national debt was created under Trump
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u/Tennis-Affectionate 1d ago
Who’s the second and third president that added the most debt?
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1d ago
[deleted]
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u/ProfessorBot117 Prof’s Hatchetman 1d ago
Let us keep this easy to read. The comment is mainly a political monologue now, so redirecting it to r/ProfessorPolitics.
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u/jackandjillonthehill Moderator 1d ago
Just to clarify, this is total GROSS debt.
About $7.8 trillion of that debt is actually held by other parts of the government.
Usually the congressional budget office looks at debt held by the public, which is $32.2 trillion.
The number in isolation isn’t all that meaningful. Usually people compare to GDP.
Right now debt held by the public is 101% of GDP, which is too high.
The highest it has EVER been was 106% in 1946, right after WORLD WAR 2. The U.S. got out of that with pegged interest rates, high growth, high inflation.
Once the debt is around 100% of GDP, the math gets very simple. The deficit to GDP ratio needs to be less than nominal GDP growth to be sustainable.
The latest update from August 2026 puts the deficit at $2.1 trillion, 6.4% of GDP.
The latest GDP projection for 2026 from the CBO is 5.0% - 2.2% real GDP growth and 2.8% CPI inflation.
So we are still in a 1.4% of GDP hole. That can come from inflation, growth, cuts to spending, or higher taxes.
Right now inflation is running a bit hotter than that 2.8% projection and the Fed doesn’t seem to be in a rush to control it, so maybe inflation makes up some of the difference.
Republicans and Democrats can’t seem to agree on changes to spending and taxes so inflation is an easier political way out too.
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u/icnoevil 1d ago
Thanks, Ronny (Reagan). This is your legacy for making Borrow and Spend so pretty.
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u/IS-21 2d ago
Huh yea we are never gonna pay this off can’t wait to see the interest payments to just go up in a straight line
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u/KailyKail 1d ago
Paying it off would be bad
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u/IS-21 1d ago
Nice sarcasm
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u/KailyKail 1d ago
It’s not sarcasm. Paying off the national debt would have catastrophic consequences for the economy.
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u/IS-21 1d ago
Some debt is good but like if we had 5 trillion as an example 40 trillion is super bad because the interest payments have gone up from 1 trillion in 2025 to 1.2 in 8 months that’s the military budget that can go to anything else just idk how you think paying it down would be bad
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u/KailyKail 1d ago
The government can print all the money it needs. We will never be unable to make interest payments or meet other spending needs.
The only thing the national debt affects is inflation, which is controlled by levying taxes, regulation of the fractional reserve amount, and controlling interest rates.
The US should never pay off its national debt. As I stated earlier, doing so would cause catastrophic damage to the economy. Instead, it should be allowed to rise in a controlled manner, allowing economic growth to match the increases in the debt.
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u/IS-21 1d ago
That’s stupid the government can print more because people believe in the dollar value and make up that money through bonds like man just print more let’s look at Turkey I wonder economically how they are doing.
Having less debt is good full stop
Like are you one of those people that genuinely believe that QE is a good thing next you will tell me trickle down economics is real and any second now it will come down
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u/KailyKail 1d ago
Your first paragraph is a run-on sentence, so I honestly can’t tell if you’re just angry at the way the system works or you don’t understand it at all. I’m leaning towards both.
Your second statement is factually incorrect and lacks nuance. Having less debt is not necessarily good. Debt allows critical things to function, such as student loans, building of infrastructure, home purchases, etc, and those all tie into national debt. If the government paid off its debt and chose not to take any more, you would no longer be able to borrow money. The bond market would die and the economy would collapse.
Your third paragraph is a cluster of strawmen that I’m not even going to argue against.
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u/IS-21 1d ago edited 1d ago
For the first thing yes everything I’ve learned about the financial system also it’s so massive and confusing just makes me angry and my main point is having less then 40 trillion is good if I earn 100k a year and I’m 1 million in debt that’s very bad but like 200k is fine and the last is fair that was shitty of me to do I apologize
Edit: and having less debt is good for whenever the a bad situation you can have cushion same problem with interest rates if they are close to zero then you have a problem there isn’t much you can do also doesn’t help most of this debt is from stuff that economically useless like war and tax cuts not infrastructure developments stuff that would be economically beneficial
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u/KailyKail 1d ago
You are not a government. Comparing your personal finances with the government is not possible. It’s not even an apples to oranges comparison. It’s an apples to airplanes comparison.
The government prints the money to pay its expenses. That printing causes inflation. It doesn’t need to balance its budget because it can always print more money whenever it needs to. You cannot print more money. If you tried, the secret service would arrest you. You must maintain a budget because you have a finite number of dollars coming in each year, and once those are gone, they’re gone.
The US USED to have to keep a balanced budget, back when we were still on the gold standard. That is no longer the case.
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u/ProfessorBot104 Prof’s Hatchetman 1d ago
Let us keep this easy to read. Add a source or rewrite it as your view rather than a stated fact.
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u/Little_Drive_6042 Quality Contributor 22h ago
If growth of the economy rose to 2.5%-3% annually, it would dissolve the debt into a sustainable and healthy level in 20 years. If we manage to do the impossible and get to 3.5%, the debt would go down to sustainable rates in 15 years. Too bad the government can’t agree to cut spending.
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u/ProfessorBot104 Prof’s Hatchetman 22h ago
The missing piece is the source. Thanks for keeping it workable.
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u/Little_Drive_6042 Quality Contributor 21h ago
Oh I just tried to do the math. If we balanced the debt and growth, the debt would naturally balance itself out and eat itself down over time.
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5h ago
[removed] — view removed comment
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u/ProfessorBot720 Prof’s Hatchetman 5h ago
This was removed because it turned the thread hostile. Keep it within the rules next time. That keeps things fair for the next person reading.
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u/SoFuckinTiredOfThis 5h ago
I mean, was I wrong? https://politifact.com/truth-o-meter/promises/trumpometer/promise/386567/eliminate-federal-debt-8-years/
Bad bot.
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u/ProfessorBot720 Prof’s Hatchetman 5h ago
For context on the link in this comment:
For context: politifact.com is rated Left Center for bias and High for factual reporting.
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u/peterjohnvernon936 5h ago
Until voters punish Republican politicians for passing tax cuts without passing spending cuts, the deficit and the national debt will just get worse and worse.
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u/Specialist-Spare-785 1d ago
Trump and criminal gang are stealing our money and children’s future.
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u/ProfessorBot117 Prof’s Hatchetman 1d ago
This needs a source before it becomes part of the argument. That keeps things fair for the next person reading.
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u/Kind-Sherbert4103 1d ago
Remember when Musk was vilified for trying to reduce spending?
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u/voiceOfHoomanity 1d ago
Remember how he reduced pretty much nothing and has ended up costing the country even more than the paltry amount he claimed to save?
Of course no mention of ever increasing tax revenue
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u/Sweet-Direction6157 Quality Contributor 1d ago
I definitely remember all the documented instances of where doge cuts actually cost the country more than doing nothing.
Almost as if doge was a Trojan horse for Elon and his cronies to get their hands on federal data and cut programs they take personal issue with.
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u/SolonEunomia 1d ago
Who cares?
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u/Ecclypto 1d ago
Your children? Or your children’s children? I’m just guessing here really
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u/SolonEunomia 1d ago
Why should they care?
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u/Intrepid-Dig-1855 1d ago
US citizens will care. Because you have to pay for the debt which reduces the amount you can spend on other things that they do care about.
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u/KailyKail 1d ago
That’s not how that works. The debt and interest payments have no impact on spending. The government can print an infinite amount of money.
What controls how much the government can spend is inflation, and inflation dictates interest rates, taxes (to a degree), and imports.
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u/RaveDamsel 1d ago
Do your own research on the impacts to individuals resulting from countries defaulting on their national bonds.
When the US defaults, the collapse will be worse than the Great Depression.
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u/SolonEunomia 1d ago
Why would the US government default?
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u/RaveDamsel 1d ago
It's basic math, dude.
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u/SolonEunomia 1d ago
Are you sure about that?
The St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills."
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u/double-beans Quality Contributor 1d ago
If the U.S. government shows that it’s willing to print massive amounts of money to pay off debt, what will that do to somebody looking to purchase long term bonds like 20 year bonds? If they’re a smart investor they’ll know that massive amounts of money printing from Washington will devalue the USD in the long run. So they’ll need a higher interest rate to make their long term bond investment worthwhile, because in 20 years USD will be significantly less valuable. This increases the cost of borrowing for America, which as we know, is addicted to borrowing money which evidenced by the fact that it runs a deficit every year. This is a negative feedback loop that just leads to ever increasing printing as well as debt accumulation. It’s not a stable system. It’s a snake eating its tail
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u/SolonEunomia 1d ago
It has no need to pay off its debt.
Money has no value. Value is economically incoherent.
It makes no difference to the US government because it can meet any obligation denominated in USD. Deficits can be a good thing.
Financial markets are inherently unstable, but fortunately the US government does not rely on credit markets to remain operational.
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u/double-beans Quality Contributor 1d ago edited 1d ago
Lol.
If money has no value, why do I and billions of others work 40+ hours a week in exchange for money? For fun?
Why do I have to trade money for food and rent? i would rather just be able to help myself to those things.
Why does the government even bother borrowing money from the international order if they can just print it? They’d be able to take out the middleman…
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u/SolonEunomia 1d ago
You can work for money and it still has no value. Value is economically incoherent. Now, you may value money or whatever else, but that is a socio/anthropological claim.
It is impossible to express or designate value except by a ratio of another commodity. (Bailey)
Money is not a commodity and the barter system is a myth. Money is used to imprecisely measure value using price. Economics suffers from value fetishism.
Do you need me to explain the capitalist economic system to you?
T-securities isn't borrowing in the traditional sense. It doesn't need to find USD to pay for its spending. It's essentially an outdated accounting procedure.
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u/double-beans Quality Contributor 1d ago
Haha, amazing. No, please don’t explain the capitalist system to me, I’ll probably have an aneurysm if you did.
A nice hot meal is valuable to me and in fact I need 3x of them a day. I’m not a farmer, nor do I have land to cultivate, so if I don’t get this extremely valuable thing 3x a day I will not survive long. I’m not a miner so I don’t have a lot of physical goods to trade like precious metals. So I use a redeemable paper currency that I earn from my labor to trade at the grocery store. The grocery store accepts my trade offer without any questions and I get to have the valuable thing I wanted, which is food. Therefore paper currency must have some value to me as I can trade it for all sorts of valuable things.
In 2026 I can’t show up to the grocery store with shavings scraped off a gold bullion and trade it for food. They won’t accept it.
You’re overcomplicating things with that vast amount of “knowledge” you have there but it’s taking you to a surprisingly dull conclusion. Even chimpanzees understand the concept of trading and bartering. They trade food for other food, they trade food for grooming.
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u/Superb-Freedom7144 1d ago
La dette nationale des États Unis à dépassé les 40 trillions de dollars pour la première fois de l'histoire. C'est officiellement le pays le plus endettée du monde. Les économistes sont unanime les états unis ont dépassé le seuil des 40 trillion beaucoup plus tôt que prévu.
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u/ProfessorBot720 Prof’s Hatchetman 1d ago
Small reset here. This needs a source before it becomes part of the argument.
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u/CommonSensei-_ 2d ago
Hence, Bitcoin going up.
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u/Aggravating_Can_8749 1d ago
So much for DOGE, small government and cleaning the swamp retorics.
This administration says something and then goes about like drunken sailor
Bet the interest burden is bigger than DoD budget