The national debt is now larger than the entire economy, putting Washington on course to cross a line it hasn't moved above since the year after World War II ended. New data from the Bureau of Economic Analysis shows publicly held debt edged past 100% of gross domestic product on March 31, hitting 100.2%: $31.265 trillion in debt versus $31.216 trillion in GDP. The government is currently spending about $1.33 for every dollar it takes in, with this year's deficit projected at $1.9 trillion, with tax cuts arriving before spending cuts take effect, the Wall Street Journal reports.
The debt-to-GDP ratio briefly topped 100% during the pandemic, but the US hasn't finished a fiscal year with a ratio over 100% since 1946, when it hit a record high of 106.5%. It dropped rapidly in the postwar years and fell below 50% by 1957, the Journal reports. It was below 40% as recently as 2008, but the years after the financial crisis saw heavy borrowing, coupled with large tax cuts and spending increases. The figure was 99.5% at the end of the last fiscal year. "We're headed toward uncharted territory," says Marc Goldwein at the Committee for a Responsible Federal Budget. "There's no magic of 100% vs. 99%, but it's a scary place to be."
The milestone underscores long-building strains. One in seven federal dollars now goes to interest, and even a tiny bump in interest rates would cost hundreds of billions more over a decade. The Congressional Budget Office expects debt to top the 1946 record by 2030 and reach 120% of GDP by 2036 if policies don't change. Holding the ratio near 100% would still require roughly $10 trillion in tax hikes, spending cuts, or both—steps economists say are hard to imagine in today's gridlocked politics.
- The debt increase didn't come from "a seismic global conflict, but rather a total bipartisan abdication of making hard choices," Goldwein said in a statement, per the Hill. "The higher we allow our debt to grow, the more we erode our own prosperity and that of future generations," Goldwein warned. "Rising debt compromises affordability by slowing income growth, pushing up interest rates, and increasing inflationary pressures. Debt squeezes our budgets with massive interest costs."
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