US public debt exceeded 100% of GDP, a threshold that for years was treated as a political alarm. But the United States’ problem may no longer be in numbers: it lies in the fact that almost no one seems willing to stop the machine.
America crossed another red line, but in Washington almost no one stopped to look at the ground.
The federal debt held by the public exceeded the size of the economy itself, according to calculations cited by , reaching more than 100% of gross domestic product. A symbolic, round mark, easy to transform into a headline, speech or solemn notice. For years, defenders of budgetary discipline have been waiting for this moment like someone waiting for a siren capable of waking up an entire country. The siren rang. But no one cares, apparently. The issue, as almost always in American politics, is not a lack of drama. It’s the lack of consequence.
A few days after the milestone was reported, Defense Secretary Pete Hegseth was defending the largest military budget request in United States history on Capitol Hill. In the Senate, at the same time, a 72 billion dollar package was being advanced to reinforce migration policy, using the reconciliation mechanism to circumvent parliamentary blockade and remove internal rules against legislation that increases the deficit. The country had just crossed a threshold that for years had been described as serious. The political response was to spend more.
The number 100 has strength because it is simple. It does not, in itself, have economic magic. Debt is not a dam that bursts the moment it exceeds maximum capacity. A debt equivalent to 99% of GDP is already heavy. What changes is public perception. And even that, this time, seems to have changed little.
Michael Peterson, president of the Peterson Foundation, one of the organizations that has raised the most awareness on the issue, told the New York Times that there is a “big case” for 100%, especially because it is a round number. The real danger signal is less in the statistical framework and more in the trajectory: there is no visible end to debt growth for now.
The United States was once here, but in another America.
After World War II, public debt also exceeded the size of the economy. The difference is that, at that point, it started to descend. Strong growth, some budget surpluses and inflation helped reduce the real debt burden. By 1974, federal debt held by the public had fallen to 23% of GDP. Today, the projected path is the opposite. The Congressional Budget Office estimates that debt could continue to rise until it reaches 175% of GDP by 2056.
The explanation comes from afar and does not fit just one President, of course, nor just one party. Debt grew with the response to the 2007-2008 financial crisis, soared again with the pandemic, was fueled by tax cuts without equivalent spending cuts, by the aging of the population, by the rising costs of Social Security and health programs, and now by the interest bill itself.
For years, very low rates made debt bearable. This phase is over. The yield on the 30-year Treasury note recently reached 5.12%, the highest since 2007, and net interest payments already exceed defense spending, according to the New York Times.
This is where the problem stops being abstract. A larger debt forces the State to issue more debt, also to pay interest on the old debt. And the more interest you pay, the less room there is for the rest: investment, health, defense, responding to crises, reducing taxes or simple political choices.
Ellen Zentner, chief economist at Morgan Stanley Wealth Management, summarized the diagnosis to the American newspaper conclusively: when clients ask her whether the American debt path is sustainable, the answer is one of the easiest. “It is not.”
Japan as a creditor, not an example
And to whom does America owe it, by the way? Before arriving in Japan, it is worth clarifying an idea that has been repeated so many times, although wrong: the United States does not owe “China”. Not like that. Not especially. American debt is spread across millions of Treasury bonds, held on very different balance sheets: banks, insurance companies, pension funds, investors, state and local governments, foreign central banks, the Federal Reserve and even funds from the federal state itself. It is a debt with many faces and, so often, no face.
This week, total US debt was about 38.95 trillion dollars, about 33.5 trillion euros. The majority — approximately 26.9 trillion euros — was debt held by the public. Another 6.6 trillion euros were within the federal machine itself: money that the Treasury owes to accounts and funds of the American State.
On the list of foreign creditors, Japan appeared in first place, with around 1.07 trillion euros. The United Kingdom came next, with approximately 772 billion euros. China came in third, with close to 596 billion euros. However, even this photograph has areas that are somewhat blurred: the numbers show where the titles are registered or stored, but they do not always say who is at the end of the chain. A bond attributed to the United Kingdom, for example, may belong to investors who only use these financial markets to access American debt. They can be the place where the money passes, not necessarily the place where the money comes from.
But speaking of Japan. Japan lives with a much higher debt than America. The International Monetary Fund placed Japanese central government debt at 201% of GDP in 2024. But the comparison with the Americans has limits. Japanese debt is almost entirely in the hands of domestic investors. The American one depends much more on external financing. And the United States has future obligations — Social Security, Medicare and other commitments — that do not appear in full in the official debt picture, but weigh on the long-term bill.
Are you worried?
The paradox is that Americans are concerned but not necessarily mobilized.
In a March Gallup poll, half of respondents said they were very concerned about federal spending and deficits, roughly on par with inflation and the economy. Only the availability and cost of health care appeared above. Therefore, the unrest exists. It lacks a political translation.
Perhaps because the debt is distant, technical, filtered by experts, media and parties. It does not reach everyday life with the clarity of a rent, a health plan or a house payment — although the rise in rates is already pushing up mortgage payments.
The problem for Washington is that doing nothing remains easier than doing something. Reducing the debt would require a politically toxic combination: probably increasing taxes, certainly cutting expenses, perhaps reviewing social programs, possibly changing military budgets, certainly having to contradict electoral promises. Each option has an electorate against it. Each postponement has a justification. And, so far, the announced catastrophe has not arrived.
Jason Furman, an economist at Harvard, is also concerned about debt, but the New York Times recalls that he himself admitted, in an article for the Aspen Institute, that an economy with debt of 100% of GDP and a deficit of 6% would have led many, two decades ago, to anticipate “extremely high interest rates” or even “a dramatic economic crisis”. None of that happened, at least for now.
This absence of shock is perhaps the greatest comfort and the greatest risk. The American economy did not collapse because debt exceeded GDP. Markets did not flee in panic. The dollar did not lose its status as the dominant currency overnight. But politics has become accustomed to this resistance as if it were an eternal guarantee. And debt, unlike a sudden crisis, does not need to burst to change a country. It can slowly narrow choices, make the future more expensive, eat up budgets and make the next shock — a war, a recession, a pandemic, a financial crisis — more expensive to deal with.
