National Debt Tops $40 Trillion as Both Parties Share Responsibility

The U.S. national debt has jumped past the $40 trillion mark, effectively doubling in under ten years.

Lawmakers in Washington have fallen into their usual fiscal theater, resorting to blame games. Democrats point at GOP tax cuts as the culprit, while Republicans insist that outlays by Democrats are the main driver. Yet both camps are accountable, each sheltering behind a lie-by-omission. If allowed to persist, they will steer us toward the same wall together.

Senator Patty Murray (D–Wash) recently described Republican tax reductions as “the primary driver” of the debt over the last 25 years. That claim employs a flawed 2001 baseline that assumed perpetual surpluses, as though the late-1990s windfall would endure forever. Jessica Riedl of the Brookings Institution offers a clearer comparison by aligning the actual 2000 budget with the 2026 budget. Tax cuts reduced revenue by about 2 percent of GDP, while spending increased by roughly 5.7 percent — almost three times as much.

Although common, the line of argument isn’t accurate. A comparison of the 2000 and 2026 federal budgets shows tax cuts totaling around 2% of GDP (other economic factors also lowered revenues). Yet spending has risen by about 5.7% of GDP since 2000. There is plenty of blame to share. pic

— Jessica Riedl 🧀 🇺🇦 (@JessicaBRiedl) August 22, 2026

Tax cuts can be valuable, particularly when crafted to improve the overall tax structure. But they are not free, and they seldom finance themselves, largely because they come with a lot of nonproductive handouts to special interests.

Yet the reality remains that even after every tax cut since 2001, current revenue as a share of GDP hovers near its long-run average. With spending climbing by nearly six percentage points, the problem is clear.

The Congressional Budget Office projects federal outlays to rise further, from 23.3% of GDP this year to 24.4% in 2036. The engines behind this growth should come as no surprise: entitlement programs and interest payments. Discretionary spending, including defense, is expected to fall relative to GDP. Revenue remains around its historical average.

However, Republicans blaming Democrats for higher spending have also been part of the pattern. As David Stockman noted in his 1986 work, The Triumph of Politics, the Reagan era failed to truly reform welfare and entitlement spending because Republicans themselves expanded these programs in the years before.

Recently, Republicans who roared against Obamacare have not repealed it, much less restructured its finances. Nowadays, you’ll hardly hear any Republican calls for reforming Social Security and Medicare, even though they have made only cosmetic adjustments to Medicaid and SNAP as they slashed taxes.

This is not new. About 26 years ago, Social Security’s trustees were already forecasting that the trust funds would run dry by 2037, after which payroll taxes would fund only about 72 percent of benefits. Today, trustees anticipate the old-age fund to be depleted around 2032, covering roughly 77 percent of benefits thereafter. The reasons are long known: longer lifespans, lower birth rates, and fewer workers per retiree. Maintaining these benefits without suffocating tax levels would inevitably entail substantial debt.

Medicare’s Hospital Insurance fund is predicted to run dry around a similar time. Yet, as Tom Church of the Hoover Institution notes, the real fiscal challenge for Medicare is that we now rely on general revenue to cover more than half of its outlays. That amount totals roughly $10 trillion over 2026-2035, mainly from Part B (outpatient and physician services). That figure is enormous, but it’s not news.

All of this has frustrated me for years. Those who warned about debt were dismissed as bearers of primitive views. When rates were low, debt was cheap. We were told that if growth outpaced borrowing costs, debt could be rolled over almost for free. The reality is that even cheap rates on a burgeoning debt are costly, and there was little chance rates would stay low forever.

Here’s what the proponents of low rates failed to grasp, and what this decade’s inflation should have made clear: Government debt represents a commitment to run future surpluses. The market expects nothing less, and the real value of the debt hinges on whether investors trust that promise.

When Washington dumped roughly $5 trillion in pandemic-era funds into the economy without a plan to fund it, investors reevaluated this promise, triggering a shift in price levels. The inflation of 2021 and 2022 wasn’t a one-off misfortune; it was the market’s reaction to unbacked debt. Higher interest rates followed, and we are still dealing with them.

That is the risk Washington has failed to price into its complacency. The danger of an unreformed entitlement state extends beyond interest payments crowding out other priorities. It is the prospect that bondholders will stop expecting future surpluses, forcing another adjustment through higher prices. Unfunded Social Security and Medicare commitments amount to a standing pledge to accumulate more debt and fuel future inflation.

So the question remains: will the politicians who profess concern about this milestone actually take a stand and reverse the tide of red ink?