$40 trillion in debt. Who pays, and how?

Deficit vs. debt

People mix these up constantly, and politicians are happy to let them. The deficit is what the government spends beyond what it collects in a single year. The debt is the running total.

Who do we owe?

Most of it is owed to the public: investors, banks, pension funds, foreign governments and regular people holding Treasury bonds. The rest is money the government owes to its own trust funds, like Social Security.

Have we been here before?

Once, right after World War II. Debt held by the public, as a share of the economy:

Debt held by the public, % of GDP. 2030 and 2036 are CBO projections. CBO, The Budget and Economic Outlook: 2026 to 2036, Feb. 2026.

The difference: after 1946, the debt shrank as a share of the economy. CBO's current projection has it climbing past that record within a few years.

The interest loop

Here's the part nobody votes on. When you carry debt, you pay interest on it. When you borrow to pay that interest, next year's interest bill grows. That's a loop.

CBO's own director put it plainly: the “fiscal trajectory is not sustainable.”

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