The U.S. national debt exceeded the total amount of output from the entire economy as of March 31, The Wall Street Journal reported Thursday.
The country’s publicly held debt was $31.265 trillion, while the nation’s Gross Domestic Product (GDP), the total value of goods and services in the economy, was $31.215 trillion. The ratio of GDP to Debt was 100.2%, up from 99.5% in September 2025, according to The Wall Street Journal. (RELATED; Cracks Emerge In Swamp’s Pork-Stuffed Farm Bill As Lawmakers Revolt Over Big Pesticide Immunity)
The government now spends $1.33 for every dollar it collets in revenue, with budget deficits running consistently at around 6% of GDP. That figure will continue to rise unless drastic spending reductions are made — which seems unlikely given the lack of serious budget cut proposals making their way through Congress.
Unfunded liabilities including Social Security and Medicare will increase as baby boomers continue to retire, further straining the federal budget. These mandatory spending programs account for approximately 50% of federal spending. Future unfunded liabilities could total as much as $193 trillion, according to a March report from Open the Books.
In 2027, the Congressional Budget Office projects that mandatory spending on Social Security, Medicare and Medicaid, plus interest on the debt, will permanently exceed federal tax revenue, according to a Boyd Institute report. That means every dollar of discretionary spending on programs ranging from defense to research to federal agencies will be completely financed using borrowed money, according to the report.
A decline in the U.S. labor force participation rate is expected to further strain the already bloated federal budget, with the rate dropping to its lowest level since 1977 in March, The Wall Street Journal reported.
The U.S. already spends more on interest payments on the debt than it does on defense spending, according to the Boyd Institute report. This issue will be exacerbated if interest payments the government pays to its debt holders increase.
The US Treasury Department building is seen in Washington, DC, January 19, 2023, (Photo by SAUL LOEB/AFP via Getty Images)
Profligate government spending prompted former Treasury Secretary Henry Paulson to warn on April 16 that the federal government needed to craft an emergency plan to address a potential crisis in the market for U.S. Treasury bonds — which investors buy and are used to fund the government’s spending deluge.
Paulson warned that as the federal government continues to rack up more debt, investors will demand higher interest rate yields to compensate them for taking on the risk of purchasing Treasury notes as the likelihood that the government can make all its payments on time declines. This in turn would cause the interest the federal government pays to finance its debt to rise, thus making insolvency more likely, a term economists have termed a “doom loop.”
“We need an emergency break-the-glass plan which is targeted and short term on the shelf, so it’s ready to go when we hit the wall,” Paulson told Bloomberg during its Wall Street Week event. “When you hit the wall and you’re trying to issue Treasurys, and the Fed is the only buyer and the prices of the Treasurys are down and interest rates are up, that’s a dangerous thing.”
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