The nation’s debt is out of control with little talk about why. How the USA went from a stable economy in the 1980s to today’s disaster is no mystery. But you won’t read explanations in the corporate press. Nor will you hear that it is a transfer of assets to the rich from working people: they get the wealth, we get the IOU.
Moreover, it is being used as a weapon in the arsenal of the powerful to cut vital social programs.
What is the debt?
It’s an astounding $37 trillion as of Aug. 11, 2025.*
Every year, revenue minus expenses determines whether there’s a surplus or a shortfall — most often the latter. Yearly deficits, minus any surpluses, add up to the total national debt. Alarmingly, ever since 2020, annual losses have been over $1 trillion. Many years of being in the red have resulted in an unsustainable amount that is growing faster than the country’s ability to pay it off.
The government covers its bills that are above incoming funds by borrowing. To do this, it sells interest-paying U.S. Treasury bonds to individuals, corporations, state and local governments, Federal Reserve Banks and other countries.
The interest owed in fiscal year 2024 was $1.13 trillion. This was the first year it exceeded a trillion dollars — but it won’t be the last.
Main drivers of debt
How the bill got so large is partly due to high spending on wars and bailouts during the Great Recession of 2008 and the Covid-19 pandemic. The rest comes from drastically lowered intake from two rounds of G.W. Bush- and Trump-sponsored tax cuts for the moneyed and corporations.
The wars in Afghanistan, Iraq and Syria cost over $5.4 trillion. At least $197 billion more went to support Ukraine and Israel’s genocidal assault on Gaza. Added to these military outlays are veterans’ services of about $111 billion annually.
In this period, there were two big economic crises where the rulers used public funds to bail out banks and businesses, providing life support to the capitalist system.
The subprime mortgage crisis of 2007 kicked off the Great Recession. The Federal Reserve loaned some $7.7 trillion to “too big to fail” banks, hedge funds, and insurance firms, which helped them rake in billions in profits. In addition, the federal government provided $831 billion in stimulus funds, which went primarily to banks and large corporations.
When Covid-19 shut down the U.S. economy in March 2020, the federal government delivered $4.65 trillion in relief funds. One fifth of this went to workers and families, but the largest portion went to corporations, banks and the wealthy. Airlines received a $54 billion bailout. This injection of taxpayer dollars revived the economy but added an unprecedented amount to the debt.
At the same time, tax cuts to the upper echelons sharply lowered the government’sproceeds. From 2001 through 2018, the George W. Bush and Trump administrations cut federal taxes for the highest brackets.
This reduced revenue by $5.1 trillion, with nearly two-thirds of that benefiting the top fifth of incomes. Bush’s cuts in 2001 and 2003 were made permanent in 2012; those passed under Trump in 2017 became permanent in his second term.
Current multiplying factors
The Trump tax changes intensify wealth inequality by giving huge breaks to large corporations and to households in the top 1%. This alone will decrease federal revenue by $4.5 trillion from 2025 through 2034. These tax breaks send the national debt soaring.
Importantly, this astronomical rise is not the result of spending to bring the country out of a crisis, as in 2008 and 2020; it is solely to make rich people richer.
Other Trump policies add to the burden carried by the majority. His tariffs are disguised taxes that consumers pay through higher prices. They fall the heaviest on those at the bottom, who spend most of their income on essentials.
Additionally, Trump’s assault on immigrants is projected to set the nation back $121.5 billion.
Paying off the debt falls on our shoulders. The breaks to the wealthy mean that billionaires and corporations now pay a far lower tax rate than the average worker.
There are other costs for those at the bottom
In July, Trump loyalists justified cutbacks to social services in the “One Big Beautiful Bill” as necessary due to the national debt. The budget slashed food stamps (SNAP), Medicaid and other healthcare outlays to offset some, but far from all, lost tax revenue. These changes severely shrink the wallets of the poor.
Before the sum owed became so massive, in 2013, the FS condemned politicians who hyped its danger because they used the risk to cut social services (see “The deficit vs. income inequality: A focus on government debt hides the real crisis for the US majority,” at socialism.com). The debt is still being used as a cudgel to reduce vital services. What’s different today is that its lofty heights add even more to income disparity.
The quality of life for ordinary folks is affected by Treasury interest rates, which rise with the debt as the government borrows more funds. Treasury rates are the benchmark that determines interest levels on mortgages, student loans, credit cards, etc. When consumers pay more to lenders for cars and homes, for example, they have less in the bank. Furthermore, bosses often keep wages low to compensate for their higher borrowing costs.
As the debt and its interest rise, future generations are also on the hook.
Wars, one of the major drivers of this debacle, profit certain corporations: defense industries, private military contractors, energy companies, to name a few. Another big contributor is tax breaks, which also benefit the 1%. So have government stimulus packages and bailouts.
Ordinary folks are the ones left holding the bag. This blatant theft from working people is becoming ever clearer and we are increasingly demanding — tax the rich!
The national debt explodes
The U.S. national debt was relatively steady for four decades after WWII, but the Reagan, G.W. Bush and Trump administrations enshrined tax cuts for the rich. The ever-increasing military budget was a bipartisan affair.
In 2013, the debt became larger than the Gross Domestic Product (GDP), which measures the size of the economy. Today, it is about 120% of the GDP. This shows how deep a hole we are in. In fiscal year 2024, interest payments alone exceeded spending on Medicare and the military combined.
*The U.S. national debt hit $37 trillion on Aug. 11, 2025. Source: U.S. Bureau of Labor Statistics. For daily updates, visit Debt to the Penny.
