The debt milestone comes as the Trump administration touts the lowest quarterly deficit in six years and soaring tariff revenues.
The U.S. government’s gross national debt has surpassed $38 trillion for the first time, according to new Treasury Department data released on Oct. 21, marking another record in the buildup of federal borrowing.
The Daily Treasury Statement shows total public debt outstanding at $38.02 trillion, up by more than $1 trillion since mid-August, when the nation crossed the $37 trillion mark. It’s the fastest trillion-dollar increase outside the COVID-19 pandemic and comes as Washington remains partially shut down amid a budget stalemate.
Treasury Secretary Scott Bessent said in an Oct. 22 post on X that the second-quarter deficit fell to $468 billion, down by nearly 40 percent from a year earlier, when there was no overlap with the Biden administration.
“Today, President Trump is putting the U.S. financial system on solid footing,” Bessent said. “Revenues are soaring and government spending is under control.”
The improvement reflects surging tax receipts, restrained spending, and new tariff revenues, according to Bessent.
In April, the Treasury chief estimated that tariff income could total $300 billion to $600 billion a year, calling it a “moving target.” The Congressional Budget Office projects that the administration’s trade and fiscal policies could reduce federal deficits by $4 trillion over the next decade.
Budget watchdogs say that the overall trajectory remains unsustainable. The Peter G. Peterson Foundation noted that the nation is now adding about $1 trillion in new debt every five months and faces higher borrowing costs following three successive credit-rating downgrades by Moody’s, Fitch, and S&P.
“Financial institutions continue to treat U.S. debt as a safe asset class, but successive downgrades reveal that this privilege is at risk,“ the foundation said. ”If market observers, including the ratings agencies, continue to lose faith in the safety of Treasury securities, the United States will have to offer higher rates of return to attract investors, which would put upward pressure on interest rates.”
Those costs are already substantial. The federal government spent $970 billion on net interest payments in fiscal 2025, nearly matching Medicare outlays and surpassing defense spending, according to the Treasury’s September Monthly Statement.
By Tom Ozimek
