Yossi Schwartz ISL (RCIT section in Israel/occupied Palestine) 21.08.2026
The US national debt has crossed the $40 trillion barrier for the first time. Gross debt has reached 123% of GDP, after soaring in the wake of the Iran war, tax cuts for the wealthy and a failure to rein in the federal government’s costs.
The U.S. gross national debt has jumped to $40 trillion this year, according to the U.S. Treasury Department. In doing so, the Trump administration broke a record in a figure that clouds the financial stability of the United States. Relative to GDP, the debt rose to 123% after the Biden administration managed to reduce it to 117% after jumping to 133% with the outbreak of the coronavirus pandemic.
Only eight countries in the world have more debt than the United States in terms of GDP — Japan with 204 percent, Singapore with 172 percent, Sudan, Bahrain, Italy, Greece, Senegal, and the Maldives. In nominal terms, the U.S. has the largest debt.
The sharp increase since Trump largely entered the White House in the current administration is due to the heavy military spending of the Iran war and the economic crisis caused by it, including increased spending on energy and an increase in the cost of financing the debt itself.
The trade war announced by Trump has resulted in the opposite result in terms of the budget than he intended. Trump has argued that he can change the tax base from a tax on labor to a tax on imports. But the revenue from the tariffs he imposed was negligible compared to government spending, and the upheaval caused by the tariffs hurt many American businesses and supply chains around the world.
The gross debt includes $32.27 trillion held by the public (net debt) and $7.78 million held by various government agencies. This year, the U.S. will have to borrow $2 trillion to finance its expenses, half of which is intended to finance interest payments. The budget deficit, which was 6 percent of GDP at the start of Trump’ s presidency, will grow this year, even though Treasury Secretary Scott Basin has promised to reduce it to 3 percent by 2028.
This American crisis has ramification for the Middle East that the US is losing and on the inter-imperialist conflict with China and Russia. The Arab states do not trust the US as a protector, and they distance themselves from Israel. China is becoming stronger. China’s economy got off to a strong start in the first three months of 2025, even as the world grappled with the turmoil caused by the Trump administration’s attempts to recalibrate global trade. GDP growth was up 5.4 percent in Q1, setting a good opening pace to achieve the annual growth target of around 5 percent. China sets its annual economic growth goal at a range of 4.5% to 5% in 2026, according to a government work report submitted to the national legislature for deliberation on March 5, 2026.
Investors in the United States and around the world have made up their minds about the outline of American debt as reflected in the US government bond market. The yield on long-term bonds has soared this year. The yield on 30-year bonds in a tender by the Ministry of Finance jumped this week to a 25-year high. Ten-year yields have also risen to record highs. Thus, China is getting stronger while the US is sinking.