Another Grim Milestone for the National Debt

Did you hear the U.S. government has blown past yet another grim milestone for the national debt? But this time, it’s not the kind of trillion-dollar milestone that usually draws media reporting. Nor is it about the federal government’s total public debt outstanding, which, as of May 14, 2026, stood at just over $38.95 trillion.

This time, the national debt in question is the publicly held portion of the total public debt outstanding, which excludes the intragovernmental holdings portion of the debt, which covers the amount the U.S. government has “borrowed” from Social Security’s trust funds and the pension funds of military and civilian government employees. And the milestone in question is none other than the size of the U.S. economy as measured by its Gross Domestic Product (GDP).

Here’s how Law & Liberty‘s Julia R. Cartwright describes it in her recent article, which references where these figures stood as of the end of March 2026:

The United States has reached a milestone, and unfortunately, it’s not one to celebrate. For the first time outside a genuine crisis, America’s national debt now exceeds the size of its entire economy. There is nothing magical about the 100% line; it’s more of a psychological threshold than a hard cliff. Indeed, debt hawks have sounded alarms for years, and the economy has not yet collapsed. But the absence of collapse is not the same as the absence of consequences. Like other developed nations that have drifted into high debt territory, cracks in the American economy are beginning to show, structurally and with compounding force.

The Ominous Milestone

As of March 31, 2026, government debt held by the public stood at $31.27 trillion, while nominal GDP over the prior 12-month period was $31.22 trillion, pushing the debt-to-GDP ratio to 100.2%. The federal government is currently spending $1.33 for every dollar it collects, running annual shortfalls near $1.9 trillion. If current policies remain unchanged, the ratio could climb toward 120% within a decade.

Cartwright continues to look at what happens when you include the government debt that isn’t included as part of the “Debt Held by the Public” classification:

That 100.2% figure is not the only way to measure the debt; you may have heard that the debt-to-GDP ratio has already exceeded 100%. This reflects different ways of measuring what the government owes. General government debt, which includes state and municipal liabilities, stands at 121%. The broadest measure, gross federal debt, includes intragovernmental obligations like what the Treasury owes the Social Security trust fund, reaching 124%. None of these figures is wrong; they capture different definitions. But they agree on one thing: the government owes a lot of money.

I think the right measure is to reference the size of the U.S. government’s total public debt outstanding with respect to the nation’s GDP. That’s because of factors like the depletion of Social Security’s trust funds to pay out that program’s benefits, which has been ongoing since 2009.

Because the U.S. government runs chronic budget deficits, it cannot fully pay off this portion of the national debt from the taxes it collects. Instead, it has to make up the difference by borrowing more from the public to pay Social Security’s trust funds. Social Security, in turn, sends all the money it gets from what it “lent” to the U.S. government to the program’s beneficiaries.

Regarding the national debt, this has the effect of transforming the intragovernmental portion into publicly held debt. The classification difference only matters for accounting purposes. By the time Social Security’s trust funds are depleted within the next eight years, the U.S. government would either have to continue borrowing to keep paying out Social Security benefits at the current level, or reduce benefits by about 20%, according to current estimates.

It’s a relatively safe bet that politicians won’t be willing to let Social Security recipients take a hit like that, because that would almost certainly get them voted out of office. They’ll probably find a way to keep borrowing more to keep those benefits flowing.

Regardless, focusing on total public debt outstanding is the better way to assess how much Uncle Sam owes relative to the size of the economy. By that measure, the federal government’s politicians and bureaucrats blew past the 100% of GDP milestone years ago.