By COMFORT OGBONNA
The U.S. national debt has climbed past $40 trillion during President Donald Trump’s second term, underscoring the growing fiscal challenges facing Washington despite promises to reduce government spending, control deficits and strengthen long-term economic growth.
Trump returned to the White House pledging to shrink the federal government, eliminate what he described as wasteful spending, end costly foreign conflicts and use stronger economic growth to improve the nation’s financial position.
Instead, federal spending has continued to rise, the national debt has reached a historic level and the cost of servicing that debt has increased as government borrowing costs remain elevated.
The developments are intensifying concerns among budget experts that the United States could eventually face difficult choices involving higher taxes, reductions in government programs or changes to major safety-net programs such as Social Security and Medicare.
The debt’s rapid increase comes less than two months before the November midterm elections, which will determine whether Republicans retain control of Congress during the final portion of Trump’s second term.
Although the size of the national debt may not be a dominant issue for voters until its effects become more visible, Americans are already feeling some of the consequences of elevated government borrowing costs. Higher Treasury yields can contribute to higher mortgage rates and other borrowing costs, while persistent inflation can reduce the purchasing power of household incomes.
Trump’s record on federal finances spans both of his terms in office. His first-term tax cuts contributed substantially to the accumulation of additional federal debt, while legislation enacted during his second term is expected to add trillions more to the nation’s borrowing obligations.
The Congressional Budget Office has estimated that Trump’s second-term tax and immigration legislation will add approximately $4.7 trillion to the debt over the coming years.
The administration has defended its approach, arguing that it has taken unprecedented steps to reduce waste, fraud and abuse within the federal government. Thousands of federal employees have been dismissed, while numerous government programs have been targeted for elimination or reduction.
The administration has also argued that stronger economic growth will ultimately improve the government’s fiscal position by increasing tax revenues and reducing the relative burden of debt.
The annual federal deficit did decline slightly in 2025, but the improvement was modest and was not enough to prevent the overall national debt from continuing to climb.
The country’s fiscal problems, however, cannot be attributed to a single president or political party.
Republican administrations have contributed to rising deficits through tax reductions and increased military spending, while Democratic administrations have also expanded federal spending through major economic stimulus programs and other initiatives.
President Ronald Reagan’s tax cuts contributed to larger deficits during the 1980s, while the administration of President George W. Bush oversaw tax reductions alongside wars in Afghanistan and Iraq.
Under Democratic President Barack Obama, government spending increased in response to the financial crisis that began in 2008. President Joe Biden similarly approved large-scale spending programs aimed at supporting the economy during and after the COVID-19 pandemic.
There have also been periods when the federal government reduced or eliminated annual deficits. During President Bill Clinton’s second term, strong economic growth, combined with fiscal reforms and negotiations with a Republican-controlled Congress, helped produce federal budget surpluses.
Long-term demographic changes are now adding another layer of pressure.
Millions of Americans from the baby-boom generation are reaching retirement age, increasing the number of people receiving Social Security and Medicare benefits while reducing the relative share of workers paying payroll taxes into the system.
The trust funds supporting those programs face growing financial pressure, raising concerns that future lawmakers may eventually have to increase taxes, reduce benefits, raise the retirement age or adopt some combination of measures to keep the programs financially sustainable.
Trump has largely rejected traditional calls within the Republican Party for sweeping reductions to Social Security and other major entitlement programs. His administration has instead supported some new government-backed initiatives, including investment accounts designed for newborn Americans.
At the same time, the administration has shifted portions of the federal revenue structure toward tariffs while lowering certain corporate tax rates.
That approach has prompted debate over who ultimately bears the cost of raising government revenue. Tariffs are generally collected from importers, but some or all of those costs can be passed on to businesses and consumers through higher prices.
Budget analysts have warned that relying increasingly on consumption-related taxes while reducing taxes on businesses and higher-income investors could place a greater relative burden on households with lower and middle incomes.
Conservative economists have long argued that lower tax rates and reduced government regulation can encourage investment, productivity and economic growth. Under that theory, faster economic expansion can generate additional tax revenue and make it easier for the government to manage its debt.
Trump has repeatedly embraced that argument, maintaining that economic growth will help solve much of the country’s fiscal problem.
But economists have warned that growth alone may not be enough to close the widening gap between federal spending and revenue.
The enormous investment boom surrounding artificial intelligence and technology is also affecting the broader financial environment. Demand for capital from technology companies and governments competing for investment can contribute to higher interest rates, increasing the cost of financing federal debt.
That creates a difficult cycle for policymakers. Higher interest rates increase the government’s interest payments, while larger interest payments require more federal revenue or additional borrowing.
Trump also promised during his campaign to combine tax reductions with significant spending cuts. To pursue that goal, he placed billionaire entrepreneur Elon Musk in charge of a government-efficiency initiative tasked with identifying major reductions in federal spending.
Musk initially pledged that the initiative could eliminate as much as $2 trillion from the federal budget.
The savings ultimately reported by the program were far smaller, totaling about $110 billion. Government auditors later questioned some of the reported savings, saying portions of the figure relied on claims that were overstated or could not be independently verified.
The administration has continued to defend its efforts, arguing that the government’s economic performance and efforts to reduce consumer prices will eventually strengthen the nation’s financial position.
Critics counter that the administration inherited an already difficult fiscal situation but has failed to reverse the underlying trends driving the debt higher.
The central challenge facing Washington is that reducing the deficit requires either increasing government revenue, reducing spending or achieving a combination of both. Each option carries significant political consequences.
Large reductions in Social Security, Medicare, defense spending or other major federal programs could face strong opposition from voters. Tax increases could also prove politically difficult, particularly in an election environment.
The United States therefore faces a growing fiscal dilemma as debt accumulates faster than policymakers have been able to address the structural imbalance between spending and revenue.
The $40 trillion milestone does not by itself represent an immediate financial crisis, but it highlights the scale of the country’s long-term obligations.
Without substantial changes in fiscal policy, economists and budget analysts expect debt-servicing costs and entitlement spending to continue putting pressure on the federal budget.
For Trump and Congress, the challenge is increasingly clear: economic growth may help ease the burden, but without meaningful changes to taxes, spending or entitlement programs, the United States’ fiscal problems are likely to become more difficult and politically painful to address in the years ahead.
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