Ahmed Kamel – Egypt Daily News
The U.S. national debt has surpassed $38 trillion for the first time in history, rising by $1 trillion in just over two months a pace that fiscal experts say is unsustainable and unprecedented outside the pandemic. The milestone, confirmed this week by the U.S. Treasury Department, underscores what analysts describe as a growing crisis in Washington’s ability to manage the nation’s finances.
“This is the latest troubling sign that lawmakers are not meeting their basic fiscal duties,” said Michael A. Peterson, CEO of the Peter G. Peterson Foundation, a nonpartisan organization focused on fiscal responsibility. “If it seems like we are adding debt faster than ever, that’s because we are. We passed $37 trillion just two months ago, and the pace we’re on is twice as fast as the rate of growth since 2000.”
Peterson warned that rising interest costs are now compounding the problem. Interest payments alone have surged to nearly $1 trillion a year the fastest-growing line item in the federal budget. Over the past decade, the U.S. spent about $4 trillion on interest, and projections show that figure could soar to $14 trillion over the next 10 years. “That money crowds out important public and private investments in our future,” he said.
Shutdown Deepens the Fiscal Strain
The latest debt spike comes amid a partial government shutdown now entering its third week. Historically, shutdowns have proven costly: the 2018–2019 closure cost roughly $4 billion, while the 2013 impasse added another $2 billion to federal expenses, according to government estimates.
Each day of halted operations adds short-term costs, delays economic activity, and postpones necessary fiscal reforms—ironically worsening the same debt problem that budget disputes often seek to resolve. Treasury officials have repeatedly cautioned that the country’s fiscal trajectory is “unsustainable.” The Treasury’s Bureau of Fiscal Service Financial Report for 2024 warned that “current policy is not sustainable” and urged Congress to act on long-term deficit reduction measures.
Despite such warnings, progress on reform has been sluggish compared with previous crises. Following the Great Recession, lawmakers imposed spending caps and deficit controls within a few years of recovery. Today, fiscal gridlock has become the norm, leaving little room for consensus on how to stabilize federal finances.
The Economic Ripple Effect
Experts warn that the burden of paying off interest on the debt will reverberate across the broader economy. A Yale Budget Lab report found that surging federal debt exerts upward pressure on both inflation and long-term interest rates effects that can slow economic growth and drive up borrowing costs for households and businesses.
Similarly, a 2025 analysis by EY projected that sustained debt growth could dampen job creation and reduce average household income over time. “The consequences of fiscal inaction are not abstract,” said one economist familiar with the report. “They show up in higher mortgage rates, smaller paychecks, and slower economic opportunity.”
Tariff Revenue Offers Limited Relief
One partial offset has come from tariff revenues under President Donald Trump’s trade policies. According to analysts, tariffs have generated around $350 billion annually, offering a modest cushion against rising deficits.
Apollo Global Management’s chief economist, Torsten Slok, called the tariff income “very significant.” The Congressional Budget Office estimated earlier this year that, before a federal appeals court struck down portions of the tariff regime, it could have reduced deficits by about $4 billion over the next decade.
Even so, the additional revenue has not altered the broader fiscal outlook. All three major credit ratings agencies have downgraded U.S. sovereign debt from the top AAA rating, citing ballooning deficits and recurring political standoffs. Those downgrades have pushed borrowing costs even higher and raised questions about the long-term stability of the U.S. dollar as the world’s reserve currency.
Gold Surges as Confidence Wavers
Investor anxiety over America’s fiscal trajectory has fueled a historic rally in gold, which remains above $4,000 per ounce—up more than 50% since the start of the year, despite a recent pullback. Analysts view the metal’s strength as a reflection of waning confidence in U.S. fiscal policy and the dollar’s purchasing power.
A Warning to Lawmakers
“Adding trillion after trillion to the debt and budgeting-by-crisis is no way for a great nation like America to run its finances,” Peterson said. “Lawmakers should take advantage of the many responsible reforms available that would put our nation on a stronger path for the future.”
As the shutdown drags on and interest payments soar, the fiscal warning lights are flashing brighter than ever. Yet with Washington mired in partisan deadlock, the path toward a sustainable budget remains uncertain and the price of inaction continues to climb.
The U.S. Treasury Department declined to comment on the latest debt figures.
