The U.S. national debt moved past $39 trillion on Wednesday, a record level coming just weeks after the start of the U.S.-Israeli war in Iran, the Associated Press reported. The milestone spotlights how, in Washington’s budget debate, different priorities can compete—ranging from tax and spending decisions to efforts to address deficits and, ultimately, the level of debt itself.
The Associated Press said the Government Accountability Office has outlined potential effects of a rising debt path for Americans, including higher borrowing costs for purchases such as mortgages and cars, lower wages where businesses have less money available to invest, and more expensive goods and services. The AP also described advocates for a balanced budget warning that if the federal government continues to borrow more and pay more in interest over time, households could face tougher fiscal tradeoffs.
Michael Peterson, chair and chief executive of the Peter G. Peterson Foundation, said in a statement that “we must recognize this alarming rate of growth and the significant financial burden we are putting on the next generation.” Peterson also argued that the current trajectory is not sustainable: he said, “At the current growth rate, we will hit a staggering $40 trillion in national debt before this fall’s elections,” adding that borrowing “trillion after trillion at this rapid pace with no plan in place is the definition of unsustainable.”
The AP reported that the federal debt has surged under both Republican and Democratic presidents, including periods driven by wars, large-scale pandemic spending, and tax cuts. It also noted that the U.S. national debt hit $38 trillion five months earlier, and reached $37 trillion two months before that.
As the Iran war continued, the AP said White House economic adviser Kevin Hassett estimated that the war had cost the U.S. more than $12 billion so far as of Sunday, while it remained unclear when the war would end. The AP also reported that Kush Desai, a White House spokesman, pointed to a decline in the federal deficit during Trump’s first year back in office.
According to the AP, Desai attributed the deficit decrease to higher individual tax revenue and what he described as a “government right-sizing push” that reduced federal employment to its lowest level since 1966, alongside “aggressive crackdown on federal welfare fraud.” Desai said those steps, together with other initiatives, would keep the deficit and debt-to-GDP ratios “trending in the right direction.”
The AP said Treasury’s Fiscal Data website reported that in fiscal year 2025, total government spending was $7.01 trillion and total revenue was $5.23 trillion, producing a deficit of $1.78 trillion. The AP reported that this deficit was a decrease of $41 billion from the prior fiscal year.