“I am the king of debt. I do love debt. I love debt.”
That is Donald J. Trump, in May 2016. So why the surprise about debt worries? It was only a question of time. First, a technical point. The headline (gross) Federal debt number is $40 trillion (as of yesterday); debt held by the public, which nets out intergovernnmental debt, is $32.3 trillion. Still, the picture is […]
In a May 2016 interview, Donald J. Trump declared, "I am the king of debt. I do love debt. I love debt." The headline debt figure stood at $40 trillion, but the debt held by the public, which excludes intergovernmental debt, amounted to $32.3 trillion. Despite these figures, concerns were evident. The graph (Figure 1) illustrates debt held by the public as a ratio to potential GDP, with the CBO projecting this ratio for February 2026.
However, the projection was established before the onset of the US-Iran war and the Supreme Court's decision overturning the IEEPA-based tariffs. During the first ten months of FY 2026, the Bipartisan Policy Center estimates the budget deficit was $209 billion higher than initially projected, largely due to announced actions, including the controversial $39 billion for defense expenditures linked to the war.
When prorated, this adds approximately $250 billion to the FY 2026 deficit. Consequently, the CBO projection should be viewed as somewhat "overtaken by events," while still providing a general direction for trend debt-to-GDP. The source of this angst seems to stem from the uncertainty surrounding fiscal policy (and overall economic policy formulation) in this administration, especially as the administration shows no coherent plan to rein in fiscal policy.
Written by urgent.news from Econbrowser's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
