United States national debt hits $37 trillion

President Donald Trump’s domestic spending plan will add over $4 trillion to the national debt over the next decade, the nonpartisan Congressional Budget Office (CBO) said this week.

The updated projection marks an increase from prior estimates, driven largely by expectations of higher interest rates that would raise the government’s debt-service costs, the CBO noted.

This steep rise in federal debt not only complicates government finances but could also deliver a direct hit to household budgets, analysts from the University of Pennsylvania, Michigan State University, and the Bipartisan Policy Center told ABC News. Rising interest rates could push up borrowing costs for businesses and consumers alike, making mortgages, auto loans, and credit card payments more expensive. Meanwhile, slower wage growth could further strain households struggling with higher debt payments.

“It was already an explosive debt path — now we’re piling on top of it,” said Kent Smetters, a Wharton School professor and former CBO economist. “It’s the future generations who will pay for this.”

The White House pushed back in June, arguing that Trump’s spending package will ultimately reduce the nation’s debt by spurring economic growth and boosting tax revenues. “President Trump’s plan doesn’t just grow the economy, it actually reduces the debt burden on future generations — something the D.C. establishment hasn’t done in decades,” the administration said in a statement.

The U.S. currently owes nearly $37 trillion, and in 2023 the CBO forecasted an additional $20 trillion in debt by 2033 — before factoring in Trump’s measure, which the agency now says will add trillions more. The last federal budget surplus came in 2001; every year since, Washington has spent more than it brought in.

As the federal debt grows, the government will need to issue more Treasury bonds, prompting lenders to demand higher yields in response to perceived repayment risks. “As the supply of those debts gets so big, lenders around the world in the U.S. and elsewhere will insist on higher interest rates,” said Charley Ballard, an economics professor at Michigan State University.

Because interest rates on government debt help set the tone for borrowing costs across the economy, any jump could mean costlier loans — and a greater risk of defaults — for everyday Americans, analysts warn.