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U.S. Debt Exceeds US$ 37 Trillion in 2025. Interest Reaches US$ 1 Trillion Annually, the Largest Spending in History, Elevating Global Fiscal Risk.
The United States reached an unprecedented milestone in August 2025: the federal public debt surpassed US$ 37 trillion, according to data from the Treasury Department. The number represents an increase of more than US$ 1 trillion in just eight months and presents the country with its greatest fiscal challenge in decades.
This is the largest debt ever recorded by any nation in modern history. The U.S. debt alone is equivalent to nearly 120% of the country’s GDP and exceeds the combined size of the economies of China and the European Union.
The Weight of Interest: Nearly US$ 1 Trillion Annually
More concerning than the absolute size of the debt is the cost to maintain it. With the U.S. federal funds rate at historically high levels, the debt service is already consuming billions daily.
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In 2025, the United States is spending nearly US$ 1 trillion per year just on interest payments — more than the country’s annual defense budget, which is around US$ 850 billion. This amount surpasses, for example, the annual GDP of countries like Switzerland or Saudi Arabia.
Every second, the U.S. Treasury spends approximately US$ 31,000 in interest, a pace that significantly pressures public finances and limits the government’s capacity to invest in social programs and infrastructure.
U.S. Public Debt: A Structural Problem
Although the growth of the debt has accelerated in recent years, the problem is structural. Since the 1980s, the United States has accumulated recurring fiscal deficits. Crises such as the dot-com bubble (2000), the financial crisis of 2008, and the Covid-19 pandemic have further exacerbated the trajectory of indebtedness.
Between 2020 and 2022, for example, the federal government added more than US$ 6 trillion in extraordinary spending to support families and businesses during the pandemic. This increase permanently elevated the debt base, which never returned to previous levels.
Global Comparisons: Who Owes More?
No country in the world accumulates such a large debt in absolute terms. Still, in relative terms to GDP, other economies also face challenges:
- Japan: public debt exceeds 250% of GDP, although primarily domestic.
- Italy: about 140% of GDP.
- Brazil: approximately 76% of GDP.
- U.S.: just under 120% of GDP.
The difference is that the United States has the advantage of issuing the world’s primary reserve currency, the dollar, which allows them to finance deficits at lower costs than other countries. But even that advantage has limits.
The Pressure on the Dollar and Fiscal Risk
The escalation of U.S. debt reinforces debates about the sustainability of the dollar as the world’s primary currency. The fact that the Treasury is issuing ever-increasing volumes of securities requires global investors to continue trusting in the U.S. government’s ability to pay.
So far, that trust remains, but warning signs are starting to appear. China and other BRICS nations have already reduced their holdings of Treasury securities while expanding the use of local currencies in trade transactions.
If this trend accelerates, the U.S. may face an even higher financing cost, creating a vicious cycle where debt grows not only from the deficit but also from ever-heavier interest payments.
The Political Stalemate in Washington
The rise of U.S. public debt is not just an economic issue, but also a political one. Congress faces ongoing disputes over the debt ceiling, a mechanism that limits federal borrowing.
In 2023 and 2024, stalemates between Democrats and Republicans brought the country to the brink of a technical default. The final agreement allowed spending to continue but did not provide structural solutions to reduce the deficit.
The result is that the U.S. continues to spend more than it collects, without consensus on cuts or tax increases that could curb the escalation.
Global Impacts of U.S. Debt
U.S. indebtedness does not only affect the U.S.: it has global repercussions.
- Financial Markets: Treasury securities are considered the safest asset in the world; their devaluation can impact reserves of dozens of countries.
- Global Interest Rate: yields on Treasuries serve as a benchmark for international loans. When they rise, they make credit more expensive worldwide.
- Capital Flows: emerging countries experience capital flight when the U.S. raises interest rates to finance its debt.
In summary, American debt is now one of the main drivers of global financial instability.
What to Expect in the Coming Years
Projections from the Congressional Budget Office (CBO) indicate that, without deep reforms, U.S. debt could exceed US$ 50 trillion by 2033. Fiscal deficits are expected to remain above US$ 1 trillion per year, reflecting both rising mandatory spending (social security and healthcare) and political resistance to cuts or new taxes.
The risk is that, in the medium term, the debt trajectory becomes unsustainable even for the United States, forcing drastic adjustments in social programs or sharp tax increases — something politically unpopular.
By crossing the threshold of US$ 37 trillion in 2025, the United States not only broke a historical record, but also triggered a red alert about the sustainability of its finances.
With nearly US$ 1 trillion per year in interest, the country spends more on debt than on defense, healthcare, or education. This reality puts pressure on the dollar, creates uncertainties in the markets, and increases risks of global instability.
The big question is not whether the U.S. will meet its short-term commitments, but rather how long it will be possible to sustain a model based on growing deficits and ever-increasing debt.
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