Debtor Nation 2026: The $40 trillion national debt

America’s national debt has surpassed $40 trillion.

The federal debt is now over 1.2 times the amount the United States is expected to produce this year, as measured by gross domestic product (GDP). This level of debt-to-GDP ratio was reached only once before, during the extraordinary borrowing associated with the emergency of World War II.

Today, the growth in the national debt is structural: The growing costs of Social Security and healthcare entitlements, which no president or Congress seems determined enough to tackle and reform. 

Government debt is unfair. It forces the people of the future to pay for services enjoyed by the people of the present. But a more immediate concern of America’s national debt is its costs. We pay interest on every dollar borrowed. Decades of deficits and rising debt have made today’s interest expenses on the national debt higher than the country’s defense spending. 

This is the third edition of Reason Foundation’s yearly Debtor Nation interactive report, which converts many kinds of official spreadsheets from the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) into interactive charts. 

President after president, the national debt grows 

The last time the federal government had a budget surplus was 25 years ago, and it was brief. The last surplus occurred in fiscal year 2001. Since then, Congress and presidents have overseen budget deficit after deficit.

Adjusted for inflation, former President Barack Obama’s two terms in office saw the national debt increase by $13.2 trillion, in 2025 dollars.

President Donald Trump’s first term added $9.8 trillion in debt, and his second term has already added more than $3.5 trillion, bringing Trump’s total to $13.3 trillion. That means that, just 18 months into his second term, Trump has already surpassed Obama as the president who has overseen the largest real increase in federal debt.

Trump’s debt figure will keep growing. The CBO expects that by the end of fiscal year 2028, four months before the end of his second term, the national debt will be $43.3 trillion. Thus, in nominal terms, by the end of Trump’s second administration, he will have overseen a total of $7.1 trillion more in nominal debt this term and about $15 trillion in total nominal debt across his two terms. (The total increase in nominal national debt during Obama’s two terms was $9.32 trillion.) The CBO’s debt forecast was also made before Trump launched the war in Iran, which will further increase deficits and debt.

Total debt amassed should not be treated solely as a presidential scorecard. First, Congress plays a significant role, and presidents don’t start from a blank slate. Presidents inherit entitlement costs, mandatory spending, and tax regimes approved under previous administrations. They may also have to contend with circumstances beyond their control, such as recessions, wars and pandemics.

Most importantly, it is hard to fully blame presidents alone when the main source of spending growth is not discretionary spending but long-established entitlement programs: Social Security, Medicare, and Medicaid, which together account for about half of the federal budget. 

The drivers of the national debt

Social Security is the largest spending category in the federal budget today, representing 22.5% of net federal outlays in 2025. 

For over five decades, Social Security’s share of the budget has been enormous but stable, around 20%, or one-fifth of federal outlays. It is other federal spending areas that have grown. 

Medicare, the federal health insurance program primarily for Americans 65 or older, has grown dramatically. The program barely registered in the budget when it began in the 1960s, but in 2025, it represented roughly 14% of federal spending. America’s aging population, rising healthcare costs, and expanded eligibility will continue to push these costs higher.

Medicare represents only about half of all federal healthcare subsidies. The OMB tracks a separate health function that includes other health insurance subsidy programs, such as Medicaid (healthcare subsidies for low-income individuals). This has also grown from the low single digits of federal spending in the late 1960s to roughly 14% of all spending today.

Combined, Medicare, Medicaid, and other healthcare subsidies represent 28% of the federal budget.  

In this era, defense spending increases almost every year in nominal dollars. As a share of federal spending, defense was highest during World War II. But in the decades after WWII, defense spending as a share of annual federal outlays fell to 23% under President Jimmy Carter, rose to 28% during President Ronald Reagan’s military buildup, dropped to 11% under President Joe Biden and has risen to 13% during Trump’s current term. The national debt has grown so large that the federal government now spends more on its interest payments (13.8% of the budget in 2025) than on defense.

You can explore all of Reason Foundation’s Debtor Nation’s interactive charts for more facts on who holds the debt, how borrowing changed across presidential administrations, and what economists project is coming next at Debtor-Nation.Reason.org.

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Source: https://reason.org/data-visualization/debtor-nation-2026-40-trillion-national-debt/