U.S. national debt just surpassed $40 trillion for the first time ever

Let’s all admit libertarians were right: The national debt just hit $40 trillion for the first time ever, “an ominous milestone for an economy that sits on a shaky fiscal foundation after decades of borrowing to pay for the rising costs of the military, social safety net programs and President [Donald] Trump’s tax cuts,” reports The New York Times. I’d alter their assessment somewhat: Tax cuts are, in principle, a great thing (allowing people to keep more of their hard-earned money is not something I oppose), and Trump’s tax cuts are not some new example of fiscal recklessness but rather a continuation of a long trend of presidents failing to heed balance-sheet realities. (This doesn’t excuse Trump’s spending issue; it just means the Times should maybe also blame other presidents too. Like his predecessor.)

The United States will borrow $2 trillion this year, and spend ample money in the future servicing that debt. Our gross national debt is roughly 123 percent of our total gross domestic product (GDP). Debt held by the public now exceeds 100 percent of GDP.

Meanwhile, if you’re a New York City parent, you can have a night off this summer on the government’s buck.

“Every parent knows that a few hours to yourself can feel like a luxury,” said Mayor Zohran Mamdani in July. “It shouldn’t be. That’s why we’re launching New York City’s first-ever Parents’ Night Out, so that parents can get a little time on their own to catch a movie, run errands or go on a date without worrying about who will take care of the kids—or how much it will cost.”

“Making New York City more affordable isn’t just about lowering costs,” he added, “it’s about giving people back their time.”

Obviously, this comes from city coffers, not federal ones. And clearly a single night of free babysitting won’t break the bank for a city of 8.5 million that rakes in almost $82 billion in tax revenues each year, and has set a preliminary budget of $127 billion, almost $30 billion larger than former Mayor Eric Adams’s first budget from four years ago.

But my point is a little more subtle: We’ve become, at every level, accustomed to the government providing us things for free, with little eye to whether this is sustainable. (The political appeal of the Democratic Socialists of America (DSA), and its many primary victories this go-around, reflects this.) Medicare and Social Security are good examples of how individual old-age benefits are very expensive—a huge share of the federal budget—but extremely hard to scale back without voter outcry. Even phased Social Security cuts, which would protect those who are already reliant on benefits or have planned around them, aren’t politically popular. (When other countries have attempted to raise retirement ages, it’s historically gone poorly.) Can we afford this amount of government spending forever?

“The inability of lawmakers to confront the debt comes with long-term risks,” adds the Times. “While the United States remains the world’s largest economy, its mounting debt load could lead investors to demand higher interest rates for U.S. bonds or raise questions about the nation’s creditworthiness, which could erode confidence in the dollar as the world’s reserve currency.” (More on the bonds issue below.)

This is a recent phenomenon; it wasn’t always like this.

“Publicly held debt—now approaching World War II levels at about 100% of the country’s annual GDP—was just 31.5% of GDP in 2001 after four years in which the government ran budget surpluses,” notes The Wall Street Journal. “Wars, the bursting of the dot-com bubble and tax cuts sent budgets off course in the early 2000s. The 2007-09 recession supercharged the trend by draining tax revenues and prompting stimulus programs, as did the Covid-19 pandemic. Meanwhile, an aging population has led to increased spending on Medicare and Social Security. But revenues haven’t kept pace.”

To put it into perspective, adds the Journal: “If Elon Musk helped pay down the debt by sacrificing the entirety of his nearly $1 trillion net worth—itself a mind-boggling sum—it would barely make a dent.”

Relatedly: Can we pay for Medicare for All?

Scenes from New York: I don’t know if I agree fully. Conservatives can’t ever embrace this mentality because they’re ostensibly against handouts. Plus, this is a Bowling Alone phenomenon—people should really be encouraged to have thick-enough community ties such that it’s rather easy to find ad hoc kid-exchanging relationships to give parents free extra bandwidth.

Conservatives sour about this initiative need to recognize the importance of having someone who – like it or not – will be influential on the left for a very long time prioritizing the importance of making it easier to raise a family in the city
(heck, why not in suburbs too!) https://t.co/MFU47wpDqN

— Patrick T. Brown (@PTBwrites) August 19, 2026

QUICK HITS

• An mRNA vaccine from Moderna-Merck succeeded in preventing melanoma cancer from coming back or spreading in initial studies. “Moderna shares rose more than 140% Wednesday afternoon, while Merck’s stock gained more than 12%,” reports The Wall Street Journal. “The companies were on track to add more than $50 billion in market capitalization combined.”
• “With less than 90 days until the midterm election, the Trump administration has sought to keep Immigration and Customs Enforcement officials out of the headlines, pulling back on the high-profile, flashy raids in blue cities and minimizing public clashes with community members and protesters,” reports Politico. “But new results from The POLITICO Poll show that half of Americans, including nearly a quarter of Trump’s 2024 voters, still say the president’s mass deportation campaign is too aggressive. That’s virtually unchanged from polling numbers in January and April, amid mounting political outrage over federal agents killing two U.S. citizens in Minneapolis.“
• The smart folks at Odd Lots are rightly noting the tension between Fed policy and Treasury policy:

Interesting tension right now with the new Fed Chair emphasizing less forward guidance and more market ‘independence,’ while the US Treasury Secretary is focused on doing whatever can to lower long-term yields

— Tracy Alloway (@tracyalloway) August 19, 2026

So when Kevin Warsh says he wants markets to “play the ball, not the referee” what are investors supposed to do when the Treasury is unexpectedly buying back long-term Treasuries? We still playing the ball here?

— Joe Weisenthal (@TheStalwart) August 19, 2026

• “Family-controlled businesses, whether public or private, employ 59% of the U.S. workforce, excluding federal employees, and generate 54% of U.S. gross domestic product, according to 2021 data from Washington, D.C.-based advocacy group Family Enterprise USA,” reports The Wall Street Journal. 
• There appears to be a viral trend going around on TikTok where stay-at-home moms throw…ice? at the bathtub? to ensure they don’t hurt their kids or something. It seems very attention seeking and strange to me.

Modern suburban SAHM life, while objectively comfortable, is often uniquely isolating. Many women’s only outlet for anything resembling community then becomes TikTok brainrot, which rewards them for being mentally ill, whether or not they start off with actual mental illness. https://t.co/LN5iuzCN7M

— Neeraja Deshpande (@neerajadeshp) August 19, 2026