U.S. national debt surpasses 100% of GDP, interest payments now exceed defense spending
The U.S. national debt reached $31.265 trillion as of March 31, equivalent to 100.2% of GDP, the first time the ratio has exceeded 100% since 1946. Net interest payments on the debt surpassed defense spending in 2024, and the Congressional Budget Office projects they will nearly double defense spending by 2036. The milestone has divided economists and policymakers, with some warning of shrinking fiscal room and others arguing the U.S. benefits from the dollar's reserve-currency status.
The U.S. national debt has surpassed the size of the entire economy for the first time since 1946, a milestone that The Wall Street Journal's Richard Rubin described as "crossing a once-unthinkable threshold."
U.S. publicly held debt reached $31.265 trillion as of March 31, equivalent to 100.2% of gross domestic product, according to Treasury data. The last time the ratio exceeded 100% was in 1946, when the country had just concluded World War II.
Net interest payments on the debt surpassed defense spending in 2024, a shift from historical norms. Over the past 50 years, defense spending averaged 4.1% of GDP and net interest averaged 2.1%. The Congressional Budget Office projects interest payments will reach 4.6% of GDP by 2036, nearly double defense spending at 2.4%.
"There isn't a special level where debt goes from problematic to catastrophic," Rubin wrote. "And the ratio might bounce around in coming quarters as tax receipts come in, tariff refunds go out and GDP fluctuates in response to inflation and revisions. Still, the triple-digit mark is a potent symbol of the fiscal stresses on the U.S. that have been building for decades."
The milestone has divided economists and policymakers. One camp warns that the U.S. margin for economic and geopolitical error is shrinking, with debt constraining the ability to respond to crises, crowding out private investment, and testing international trust in U.S. Treasuries. Economic historian Niall Ferguson's law states that "any great power that spends more on debt servicing than on defense risks ceasing to be a great power."
The opposing argument holds that the U.S. benefits from the dollar's reserve-currency status and the lack of a viable alternative to U.S. Treasuries. Japan, France, Canada, Italy, and a dozen other countries each have debt greater than the size of their economy, yet continue to borrow.
Frederick Kempe, president and CEO of the Atlantic Council and author of the Inflection Points newsletter, wrote that "true economic inflection points are as much psychological as statistical, defined more by a change of perception than by a number." He added that what worries him "more than the debt numbers themselves is the complacency around them—as fiscal choices are deferred and today's extreme becomes tomorrow's baseline."