What Does $37 Trillion Mean?

By mid-2025, total federal debt rose to $36.8 trillion and is expected to exceed $37 trillion soon. This amount equals about 123% of the US Gross Domestic Product (GDP), surpassing World War II era debt levels. The Congressional Budget Office (CBO) predicts this ratio will exceed 130% over the next decade if current policies continue. 

Russian Foreign Minister Sergey Lavrov stated that the US debt level is out of control. He also said the US dollar is no longer a reliable means of payment.
Lavrov commented, “COVID-19 revealed numerous flaws in the global trade and financial system. The dollar turned into a penalty tool. Trust has been shaken.” He highlighted that the number of highly indebted countries rose from 22 in 2011 to 59 today.  These remarks reveal that the growing US debt burden causes concerns not only locally but also for global financial stability. 

Key Risks and Economic Impacts 

• Rising Interest Payments: As interest rates rise, the government will pay over $1 trillion annually in interest. This amount is close to, or even surpasses, the defense budget, potentially overshadowing health, infrastructure, and education spending. 
• Slowing Economic Growth: Economists warn that shifting investments from private to government debt may harm productivity and wage growth. Studies suggest rising debt could reduce GDP by over 1% by 2035, leading to millions of job losses. 
• Inflation and Fiscal Imbalance: Large budget deficits may force central banks to keep interest rates low, complicating inflation control and weakening monetary policy effectiveness. 
• Credit Rating and Investor Confidence: Moody’s downgraded the US credit outlook in 2024. This could raise borrowing costs and cause investors to lose confidence. Higher Treasury yields may increase volatility in both domestic and global markets. 

Pressure on the US Dollar

Increasing debt and deficits erode confidence in the dollar. While still the global reserve currency, fiscal indiscipline pushes investors away, creating downward pressure on the dollar’s value. 

Billionaire investor Ray Dalio warns that Treasury supply will outpace demand, driving inflation up and the dollar down. Fiscal experts say uncontrolled spending could add $6 trillion to debt and increase interest costs over the next decade. Institutions like the Cato Institute and Peter G. Peterson Foundation call for bipartisan reforms. 

Still, the US retains important advantages. The dollar’s global reserve status maintains strong demand. Most debt is held domestically by government funds and American investors, reducing foreign sales risk. In global crises, investors view US Treasuries as a safe haven. Despite high debt, borrowing costs remain relatively low. 

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