The U.S. national debt is likely to surpass $40 trillion this week, months earlier than forecasters previously expected, in part because of billions of dollars in lost revenue from President Donald Trump’s invalidated tariffs.
The lost revenue has forced the U.S. Treasury Department to borrow more rapidly to cover the nation’s bills: Six months ago, the nonpartisan Congressional Budget Office projected that total borrowing would top out at $39.4 trillion this fiscal year. But on Monday, Treasury reported that the debt stood at $39.9 trillion and counting.
The faster accumulation of debt means the next deadline for raising the legal limit on borrowing is also likely to arrive ahead of schedule. Just last year, Congress set the debt limit at $41.1 trillion. Budget analysts now say borrowing could hit that threshold by early next year, forcing lawmakers either to suspend it or raise it again to avoid the risk of an economy-shaking default.
Trump is already focused on the debt limit, which has repeatedly plunged Washington into a dangerous game of legislative chicken. Late last month, the president urged the Senate to address “the ever looming Debt Ceiling disaster” before leaving town for its August recess.
Senate leaders did not comply, but Majority Leader John Thune (R-South Dakota) told reporters at the time that “we’ll have to be dealing with it.” He added: “$40 trillion in debt — seems to me that should get our attention.”
For the past quarter-century, the national debt has grown under both parties, through the tax cuts of the George W. Bush era, the wars in Iraq and Afghanistan, the Great Recession, the 2017 Trump tax cuts and the nearly $2 trillion Biden administration initiative to prop up the economy during the coronavirus pandemic. Trump pledged during his first campaign in 2016 to eliminate the debt within eight years; instead, it has doubled since he first took office.
This year, the gap between spending and revenue was already expected to approach $2 trillion, the CBO reported in February. Days later, the U.S. Supreme Court struck down Trump’s “Liberation Day” tariffs, cutting federal revenue by an estimated $250 billion. The Treasury has also increased borrowing lately to build up its cash reserves.
Military spending tied to the conflict with Iran could add more to the debt in the months ahead, according to the Bipartisan Policy Center, a nonpartisan Washington think tank that tracks federal spending.
“Our current fiscal trajectory is plainly unsustainable, and that’s the best-case scenario,” BPC president and CEO Margaret Spellings said in a statement. “AI disruption, a recession, global war, or any number of other events could quickly push us over the edge from a challenge into a full-blown crisis. Even in the rosiest scenarios, we’re speeding toward a cliff and refusing to turn the wheel.”
In an email, White House spokesman Kush Desai said that “the Trump administration remains focused on slashing waste, fraud, and abuse across the federal government while accelerating economic growth, policies that will get America’s debt-to-GDP ratio trending in the right direction.”
So far, Washington lawmakers have raised or suspended the debt limit every time it has been reached, but often after dramatic, deadline-pushing partisan battles. Even these near misses have rattled markets and carried a price: Standard & Poor’s, Fitch and Moody’s have each downgraded the credit rating of U.S. government debt since 2011, moves tied at least partly to debt ceiling brinkmanship.
Congress last raised the debt limit in quieter fashion, adding $5 trillion to the debt ceiling as part of the One Big Beautiful Bill Act, the Republicans’ marquee tax and spending law. Measures to raise the debt ceiling often include spending cuts aimed at reducing the annual budget deficit. But the One Big Beautiful Bill Act, which Trump signed in July 2025, did the opposite: That law added $4.7 trillion to projected deficits over the next decade, according to CBO estimates.
According to preliminary projections by the BPC, Washington is on track to next hit the debt limit between late winter and midsummer 2027. Based on the latest borrowing figures, the center’s estimate is “trending toward the earlier end” of that range, Shai Akabas, the center’s vice president of economic policy, said in a statement.
Hitting the debt ceiling would not by itself trigger a default. Once the borrowing limit is reached, Treasury can pay bills by drawing on its cash reserves and using stopgap accounting maneuvers known as “extraordinary measures,” which typically buy another six to nine months, according to the BPC. Only after that runs out does the government reach what’s known as the X-date, when the Treasury risks running out of cash and defaulting on its obligations.
If Republicans lose one or both chambers of Congress in the Nov. 3 midterm elections, they could attempt to raise the debt limit in the lame-duck period during November and December — before the new Congress is seated in January. Otherwise, they could be forced to make policy concessions to Democrats that Republicans — and the White House — would prefer not to make.
But raising the debt ceiling could prove challenging even under total GOP control. Especially in the House, where the GOP holds a slim majority, party leaders would be forced to win over their fiscal hawks, who have previously revolted when a debt ceiling increase was not accompanied by an agreement to cut spending.
“You have to raise the debt limit just the same way that you have to pay your credit card bill,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, a nonpartisan group focused on deficit reduction. It reflects spending choices you’ve already made, he said. “But if you keep getting credit card bills that are more than you can afford, it’s probably a good time to reassess how much you’re spending, or to get a second job, right?”
As with many credit cards, interest is itself becoming a bigger part of the problem. Last week, the U.S. government sold 30-year bonds at 5.216 percent, the highest rate in a quarter-century, Bloomberg News reported. Treasury rates ripple into mortgage rates, corporate debt and other borrowing.
Annual interest payments on the debt are projected to top $1 trillion this year, according to CBO — about the size of the Pentagon budget. They now consume about 19 percent of federal revenue, according to the Peter G. Peterson Foundation, a nonpartisan group that tracks the debt and advocates for fiscal discipline, and are projected to climb to 26 percent by 2036.
“Interest costs are paying for your past, not paying for your future,” said Peterson Foundation chief executive Michael Peterson, and unfairly burden future generations.
“It’s immoral to, year after year, trillion after trillion, just keep borrowing the money, not paying your bills for immediate consumption and deferring not only the principal balance but the interest costs onto our kids and grandkids,” he said.
Peterson pointed to Social Security as a preview of what happens when Washington puts off big problems: Unless Congress acts, the program’s trust fund is projected to become insolvent in 2032, triggering an automatic 22 percent cut in benefits.
“Can a democracy that’s run by all of us collectively make tough decisions to sacrifice in the short term for long-term benefit?” Peterson said. “The political system hasn’t risen to this challenge in recent decades.”
Theodoric Meyer and Jarrell Dillard contributed to this report.
