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The U.S. government’s gross national debt has surpassed $38 trillion for the first time, according to new Treasury Department data released on Oct. 21, marking another record in the buildup of federal borrowing.
The Daily Treasury Statement shows total public debt outstanding at $38.02 trillion, up by more than $1 trillion since mid-August, when the nation crossed the $37 trillion mark. It is the fastest trillion-dollar increase outside the COVID-19 pandemic and comes as Washington remains partially shut down amid a budget stalemate.
Treasury Secretary Scott Bessent said in an Oct. 22 post on X that the second-quarter deficit fell to $468 billion, down by nearly 40 percent from a year earlier, when there was no overlap with the Biden administration.
“Today, President [Donald] Trump is putting the U.S. financial system on solid footing,” Bessent said. “Revenues are soaring and government spending is under control.”
The improvement reflects surging tax receipts, restrained spending, and new tariff revenues, according to Bessent.
In April, the Treasury chief estimated that tariff income could total $300 billion to $600 billion a year, calling it a “moving target.” The Congressional Budget Office projected that the administration’s trade and fiscal policies could reduce federal deficits by $4 trillion over the next decade.
According to budget watchdogs, the overall trajectory remains unsustainable. The Peter G. Peterson Foundation noted that the nation is now adding about $1 trillion in new debt every five months and faces higher borrowing costs following three successive credit rating downgrades by Moody’s Ratings, Fitch Ratings, and S&P Global Ratings.
“Financial institutions continue to treat U.S. debt as a safe asset class, but successive downgrades reveal that this privilege is at risk,” the foundation stated. “If market observers, including the ratings agencies, continue to lose faith in the safety of Treasury securities, the United States will have to offer higher rates of return to attract investors, which would put upward pressure on interest rates.”
Those costs are already substantial. The federal government spent $970 billion on net interest payments in Fiscal Year 2025, nearly matching Medicare outlays and surpassing defense spending, according to the Treasury’s September Monthly Statement.
“We’re on course to spend $1 trillion just on interest payments on the national debt this year, exceeding our spending on our national defense,” Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, said in a statement. “Something has to give, and eventually it will, whether we are prepared for it or not.”
The national debt clock is displayed at a bus station in Washington on April 14, 2025. Madalina Vasiliu/The Epoch Times
Since early 2024, the U.S. debt has grown by $4 trillion, climbing from about $34 trillion to $38 trillion, a pace fiscal analysts say highlights the widening gap between robust short-term revenues and the government’s deep-seated structural obligations.
“The reality is that we’re becoming distressingly numb to our own dysfunction,” MacGuineas said. “We fail to pass budgets, we blow past deadlines, we ignore fiscal safeguards, and we haggle over fractions of a budget while leaving the largest drivers untouched.
“Social Security and Medicare, for example, are just seven years from having their trust funds depleted—and you don’t hear anything from our political leaders on how to avoid such a disaster.”
Social Security’s two main trust funds—the Old-Age and Survivors Insurance and Disability Insurance funds—are projected to run out of money on a combined basis in early 2034, according to an Aug. 5 letter from the program’s chief actuary.
If trust funds are depleted in 2034, incoming payroll taxes would cover about 80 percent of scheduled benefits—declining to 72 percent by 2099—which would mean automatic across-the-board cuts for tens of millions of Americans unless Congress acts.
Social Security Administration Commissioner Frank Bisignano said in September that the Trump administration is weighing a range of options to shore up Social Security finances, including potentially lifting the cap on taxable earnings, although he ruled out raising the retirement age. He said the responsibility for ensuring program solvency ultimately lies with Congress and the program’s trustees.
Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.
