Axios: America’s debt explosion

Posted on August 21, 2026 by michelleclarke2015
America’s debt explosion
 
Animated illustration of an American flag that gets squeezed in a vise made of a dollar sign on one side and a sparkle shape on the other.
Illustration: Brendan Lynch/Axios
 
America is caught in a historic capital squeeze, Axios’ Zachary Basu writes.

On one side: Trillions Washington must borrow to pay for the past.

On the other: Trillions the economy needs to build the future.

Why it matters: The next president will inherit a fiscal reckoning decades in the making. The price it exacts — on taxes, benefits, borrowing and investment — could shape America’s prosperity and power for generations.

🔎 Zoom in: President Trump said in 2016 that he could eliminate what was then roughly $19 trillion in national debt within eight years. On Tuesday, the debt crossed $40 trillion, after growing by $3 trillion in the past year alone.About $32 trillion is owed to investors and other outside holders. The rest is debt the government owes to its own accounts, including Social Security and other federal trust funds.

Treasury must refinance $9.7 trillion in debt coming due this fiscal year while covering a deficit the Congressional Budget Office now projects at roughly $2.1 trillion.

That creates a punishing cycle: Old debt comes due, Washington replaces it with more expensive debt, and the resulting interest bill feeds future deficits.

CBO projects annual deficits will average $2.4 trillion through 2036, pushing debt held by the public to 120% of GDP — above the record set after World War II.

The U.S. has already spent $963 billion on interest in the first 10 months of this fiscal year, $200 billion more than it spent on the military over the same period.
A line chart shows net interest costs by fiscal year from 2016 to 2025, with projected figures extending to 2036. Interest is projected to surpass $2.1 trillion by 2035. An annotation indicates that interest costs exceeded defense spending in 2024.Data: CBO. Chart: Sara Wise/Axios

🔭 Zoom out: For years, Silicon Valley’s AI buildout was financed almost entirely with cash. Now Big Tech is becoming one of the biggest new forces in global debt markets.

Bond sales by the “hyperscalers” building AI infrastructure are on pace to roughly double in 2026. Goldman Sachs projects debt will fund more than a third of the AI buildout by next year. Nvidia is working with BlackRock, Goldman Sachs, KKR and other Wall Street giants on plans to marshal more than $500 billion for AI infrastructure.

💰 Stunning stat: Nine major tech companies have already spent roughly $600 billion on capital projects over the past year.

A Wall Street Journal analysis found they have another $3 trillion in future commitments, mostly tied to AI, that aren’t yet reflected on their balance sheets.

👀 What to watch: America’s fiscal options are narrowing as its political ambitions expand.

On the left,  democratic socialism and economic populism are surging, pairing promises of cheaper housing, health care and child care with calls for higher taxes on the wealthy.

On the right, the Trump-era GOP has protected Social Security and Medicare politically while pursuing tax cuts and higher defense spending, including Trump’s push for a $1.5 trillion Pentagon budget. Share this story.
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About michelleclarke2015

Life event that changes all: Horse riding accident in Zimbabwe in 1993, a fractured skull et al including bipolar anxiety, chronic fatigue …. co-morbidities (Nietzche 'He who has the reason why can deal with any how' details my health history from 1993 to date). 17th 2017 August operation for breast cancer (no indications just an appointment came from BreastCheck through the Post). Trinity College Dublin Business Economics and Social Studies (but no degree) 1997-2003; UCD 1997/1998 night classes) essays, projects, writings. Trinity Horizon Programme 1997/98 (Centre for Women Studies Trinity College Dublin/St. Patrick's Foundation (Professor McKeon) EU Horizon funded: research study of 15 women (I was one of this group and it became the cornerstone of my journey to now 2017) over 9 mth period diagnosed with depression and their reintegration into society, with special emphasis on work, arts, further education; Notes from time at Trinity Horizon Project 1997/98; Articles written for Irishhealth.com 2003/2004; St Patricks Foundation monthly lecture notes for a specific period in time; Selection of Poetry including poems written by people I know; Quotations 1998-2017; other writings mainly with theme of social justice under the heading Citizen Journalism Ireland. Letters written to friends about life in Zimbabwe; Family history including Michael Comyn KC, my grandfather, my grandmother's family, the O'Donnellan ffrench Blake-Forsters; Moral wrong: An acrimonious divorce but the real injustice was the Catholic Church granting an annulment – you can read it and make your own judgment, I have mine. Topics I have written about include annual Brain Awareness week, Mashonaland Irish Associataion in Zimbabwe, Suicide (a life sentence to those left behind); Nostalgia: Tara Hill, Co. Meath.
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