U.S. debt-to-GDP ratio reaches 123%
fred.stlouisfed.org
fred.stlouisfed.org
Which is an intentional strategy to repeal social programs that they’d never get the votes to do so via legislation
Republicans are the only party that in the 21st century acts as though we can simultaneously cut taxes and increase spending and everything will be fine.
What does change(and is more important) is Debt/Revenue:
https://fred.stlouisfed.org/graph/?g=TZfm
The ratio is looking like it is trending in the right direction. If GDP decreases while nominal tax receipts increase, GDP does not change the debt, while the debt/Revenue ratio looks good for paying bills, while not boding well for economic health.
What is this "real world" you are referring to? There has to be a balance between current and future expenditures and economic health to facilitate these. Nothing exists in a vacuum.
Republicans may generally prefer creating money over destroying money, but that doesn't mean they aren't applying taxation. "Tax cuts" in normal speak just means a reduction in how much money is being destroyed. It does not refer to a reduction in your tax burden.
Exactly. Also known as a tax. You can make someone poorer by taking their money and destroying it, or you can make someone poorer by letting them keep their money and devalue it by creating more. Same coin no matter which side you want to look at it. There is no such thing as a free lunch. The taxes are always going to get paid in the end. The only choice is in exactly how you want to pay it. Each method has its own set of tradeoffs, so, like with everything, different groups understandably believe in different methods. In practice, both methods will be used. Nobody, apart from the previous commenter, is ever completely hardline "money must only be destroyed" or "money must only be created", but groups will still debate over what is the optimal ratio.
"Taxing billionaires" is the left's version of "cut Medicaid fraud." It's a message for low-information voters who have a gut feeling that free stuff will require more taxes, but get confused converting from billions to trillions: https://www.washingtonpost.com/opinions/2020/03/06/msnbc-sug...
That's why Democrats say "we're the only developed western country without universal healthcare," but never "we're the only developed western country without a 15%+ VAT."
In practice though tax cuts usually make rich richer without helping the economy to grow (because of lobbying/corruption).
This is being generous. It's much simpler.
The poor don't pay any federal taxes at all so you can't give them a tax cut because they don't pay any. You can give them a credit at best.
Edit:
Some data
> Another 60.3 million returns showed AGIs of less than $30,000. The average effective tax rate for those taxpayers was 1.5%, even before refundable tax credits were applied.
From: https://www.pewresearch.org/short-reads/2023/04/18/who-pays-...
Even if we exclude poor there are many options how to split taxes between different income brackets, how to tax salaries vs capital gain, how to split taxes between individuals and businesses, how to avoid loopholes e. t. c. (e. g. in the UK I see small business struggling because of rising taxes while multinationals pay little taxes by moving profits offshore and reporting no profits in the UK).
And the other half thinks you can pay for a European-style welfare state without European-style middle class taxes. Americans are Disney adults.
Given that the US has a population of 342.7 million people [3], those two trillion dollars divides out to $5800 per resident per year.
The UK's universal healthcare system costs ~$4700 per person per year (~£3,500)[4].
If we could spend healthcare dollars as efficiently as the UK, the current government spending in the US is enough to support a single payer healthcare system covering every resident without raising taxes.
[1] https://www.cms.gov/data-research/statistics-trends-and-repo...
[2] https://www.kff.org/medicaid/medicaid-financing-the-basics/#...
Except we couldn't. For the same reason our public schools can't get Finland's test scores while spending $3,000 less per student pear year than the U.S. For the same reason our public transit systems can't build subways for $100 million per km, like Spain.
Why that is is a bit complicated and doesn't have a single root cause. It's also a bit tricky because every major component blames the other components for the total cost.
Part of the problem (roughly 10% by one estimation I read) is drug prices. Drug prices in the US are >2x the price as compared to other developed countries [1].
No, my point is that we couldn't achieve UK costs by doing "single payer." Our publicly funded systems, like schools and transit, are also cost-inefficient (public schools somewhat less so, public transmit somewhat more so).
I already mentioned drug prices, another input in the cost of US healthcare is the cost of physician salaries. Physicians in the US are paid ~2x what physicians in the UK are paid [1].
One input to physician salaries is that we limited the number of new doctors by limiting the number of residency positions.
[1] https://www.physiciansweekly.com/post/how-do-us-physician-sa...
If I compare the prices of a PS5 in the US to a PS5 in the UK (excluding the 20% Tax), they are basically the same price [1].
If I buy a pair of 501 Levi's jeans in the UK [2] and a pair of 501 Levi's jeans from the US [3] I pay basically the same price (again excluding VAT).
If I buy a Ford compact crossover in the US and buy a Ford compact crossover in the UK, I pay basically the same price of ~$33k.
Please explain why it is a fact of life that a drug in the US costs considerably more than the same drug from the same manufacturer just purchased in Europe.
Why can we not compare the cost of drugs Canada, Japan, UK, Germany, ... to the price of drugs in the US?
And again, drugs cost considerably more in the US whether they were purchased publicly or privately.
[1] https://blog.playstation.com/2026/03/27/new-price-changes-fo...
[2] https://www.levi.com/GB/en_GB/clothing/men/jeans/straight/50...
[3] https://www.levi.com/US/en_US/clothing/men/jeans/straight/50...
Services aren't goods manufactured in a single place. Delivery of healthcare services in the U.S. versus U.K. reflect myriad factors that are rooted in differences between Americans and British people. Americans wouldn't tolerate the trade-offs in the British healthcare system--a system I think is very good, btw--for the same reason they wouldn't tolerate living in little British houses or driving little British cars.
> Please explain why it is a fact of life that a drug in the US costs considerably more than the same drug from the same manufacturer just purchased in Europe.
It's a policy determination to subsidize drug companies to make sure we get access to the latest drugs.
I do not believe this is true. Keep in mind that the UK has universal healthcare (NHS) but also has a private healthcare system.
The private healthcare system can be used to prioritize speed, comfort, elective procedures, ...
Around 12% of the UK population has private medical insurance [1].
> It's a policy determination to subsidize drug companies to make sure we get access to the latest drugs.
There are cases in which a drug is under extreme demand outstripping manufacturing capacity. In these cases, paying more can provide access to a limited resource.
However, to my eyes, this appears to be an unusual occurrence rather than the typical state of drug production worldwide. I don't see evidence that the amount the US pays for drugs results in dramatically higher access.
I believe the opposite is true. If a drug is available in a US pharmacy but it is unaffordable, does one have access to it? I would say no.
[1] https://www.theguardian.com/society/2025/jan/30/almost-one-i...
In the UK, 61% of people report being satisfied with their healthcare, according to OECD. In the US, it’s 75%. https://www.oecd.org/en/publications/health-at-a-glance-2025...
The only thing intentional in politics is preserving your personal status and wealth. This is bipartisan.
It could be a very messy bubble if/when it collapses, and I think our way out at this point would have to be AI-driven productivity gains. Hopefully Altman's little wish-granting machine ends up being accurate.
> Basically, America has an economy that is buoyed by AI development and infrastructure spending right now but is poised to pop and the national debt has been ballooned by two to three generations of political leadership failing to properly address underlying issues and instead printing money.
Maybe we shouldn't have spent five decades giving the wealthy tax break after tax break while hollowing out the middle class and suppressing wages with union busting and globalization. Productivity is up ~90% over this time frame, and most of the gains have gone to the top 1%. But here we are. The bill has come due for strip mining the country economically, and taxes will go up to pay down this debt (because only the top ~40% of income earners have enough income to have a federal tax liability). We will fix this eventually through demographic compression (economic growth comes, broadly speaking, from population growth and the US has reached peak population; forward growth will be substantially lower than the past when the population was growing rapidly), politics, and the bond market forcing the US government to raise taxes (“bond vigilantes”).
it won't be the wealthy or cash-under-the-table classes paying these taxes, the increases will be in the income brackets. Which means paycheck receiving working stiffs ( middle and upper-middle class ) and retierees drawing from a 401k/IRA are the ones who will pay just like always.
Hell, between PPP and the OBBB tax cuts, rich people are getting $2T over from the YS Governemnt from 2020-2030. It’ll keep happening too, this country is an oligarchy now. Wish it wouldn’t but I don’t see a sea change coming, just further concentration of wealth and power.
Iran War Cost Tracker - https://news.ycombinator.com/item?id=47237080 - March 2026 (446 comments)
Pentagon Tells Congress First Week of Iran War Cost More Than $11.3 Billion - https://www.nytimes.com/2026/03/11/world/middleeast/iran-war... | https://archive.today/Q4oDX - March 11th, 2026
Consumer energy excess cost burden is ~$76B as of this comment (indirect regressive consumer tax):
https://iranwarcost.watson.brown.edu/
> Meanwhile, Medicare, Medicaid, and Social Security each grew around $100 billion in the last year.
While we should be efficient with these programs, that's what government is for, and what I pay US federal taxes for: to take care of my fellow citizens. Not to bomb innocent people with overpriced military industrial complex hardware on the other side of the world for illegitimate reasons (F-35 program costs now exceed $2T, for example).
https://usafacts.org/government-spending/
Pentagon Fails Eighth Audit, Eyes 2028 Turnaround - https://www.military.com/feature/2025/12/24/pentagon-fails-e... - December 24th, 2025
Annual net interest on debt is ~$900B/year, as of this comment; we could replace Medicare and Medicaid with Medicare for All for ~$2T/year, which would contribute to constraining healthcare spending increases: https://news.ycombinator.com/item?id=48666290. It is an active choice to continue to operate the entire system inefficiently; we could make other, better choices. The inefficiency and debt growth is a result of operating the system for entrenched interests to profit off of the dysfunction.
For you to deny that social spending is problem (especially for what it does buy) totally denigrates you and your position.
I also thought that the military budget was too big... in 1998. But in 2026, Europe is raising defense spending targets to 3.5% of GDP, which is more than what the U.S. spends: https://www.bbc.com/news/articles/clyz4nq91wpo
It turns out that, if the U.S. isn't willing to guarantee your security, you have to spend 3-5% of GDP on defense (just like Europe used to do before 1990). As the U.S. loses hegemony and we move to a multi-polar world, everyone's military budgets will go up.
> If American foreign policy was rational, we wouldn’t have been involved in Korea, Vietnam, Iraq, and now Iran. Not to mention Somalia, Kosovo, and Libya, and countless minor skirmishes. We’ve been throwing kids into the meat grinder for 75 years, and lighting dollars on fire, for no good reason. There’s no reason for us to light money on fire having bases all over the world, when we have two huge oceans to protect us.
The hypothesis is that lowering taxes rates will actually increase government revenues.
The Trump cuts don't feel like they're laffer optimal. Instead they feel like political capture by the wealthy class. A cumulative of left of laffer optimal tax strategies over the past years have resulted in a deficit growing at rates which now exceed what a laffer peak rate would now support.
- the rich got their tax breaks, and have contributed to deficits for decades. Now they complain that social security entitlements must be cut to keep within our means.
That's the Starve the Beast strategy.
If this were the case, revenue would have gone up after the tax cuts. They didn't. Receipts as share of GDP fell and the deficit tripled. The debt went from 25% of GDP to 40% of GDP during Reagan. We've never meaningfully been on the wrong side of the Laffer curve. It's basically just conservative propaganda at this point.
As the other post mentioned, the strategy is and was Starve the Beast. We know this because that's what Reagan actually campaigned on.
> "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker."
That changes everything, doesn't matter that it didn't work at all.
It's not surprising they don't care because they literally have policy to do damage like this and their explicit goal has been this exact outcome.
Past performance is not a predictor of future returns.
It makes more sense to conceptualise it as the total size of a giant savings account run by the government.
We are walking further out on the ice but that is measured more in other ways - with harder metrics like inflation, access to cheap energy, resources, industrial density and capabilities and access to technology - not this headline number.
no, sometimes they literally do exactly that.
google for quantitative easing. that's what it is and it's a tool that can always be used by monetarily sovereign countries to bring bond interest rates down by as much as they want.
insolvency thus isnt possible.
You might want to look up Zimbabwe or Germany (after WW1). When your money becomes worth less than the paper it's printed on...
So, it's possible, and has happened before.
As soon as you start devaluing your currency to get out of debt, not so much. I believe Argentina is a fine example of that
when I said "monetarily sovereign" I think you probably didnt understand what that meant.
If a country ever decides to use your 'monetary sovereignty' they might as well just stop playing their debts as any holder of the debt will see that as the same thing. They're not getting their money back, or when they do they get it in a currency now worth a lot less. At this point you can say you're still solvent in the same way as you can say you did repay all your debts.
See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
It might seem like a minor distinction but it's actually very important. Gold can't be printed, whereas currency can be, so insolvency when your debts are denominated in gold is very possible.
Argentina is also another example of a country that suffered hyperinflation because it had debts denominated in something it could not print (dollars).
Whereas Japan had even higher debt / GDP than Argentina and got deflation instead.
However, it's a bit moot in my opinion. When the US owes me $100B and they pay that by 'creating' $100B through the central bank, in terms of value of the currency that's bad because there value of that payment dropped.
You can do this, it's what the quantitative easing policy did, but only in very limited amounts. If you were to do it because you were no longer solvent I would expect it to be the end of the trust and value of your currency. So in a sense it's not very different.
Maybe you can argue that if the alternative was complete insolvency then the Fed would feel obligated to comply, but you find yourself in a scenario where you're choosing between immediate economic collapse and rapid economic collapse.
It's the old saying, if you owe the bank $1,000 then you have a problem. But if you owe the bank a trillion dollars then the bank has a problem.
Especially when that trillion dollars was spent on an insane fleet of aircraft carriers.
The reality is that purposefully inflating your currency to reduce your debt burden is going to upset your creditors just as much as if you just defaulted on your debts, but will have the added affect of crippling your economy with inflation. Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% *monthly* inflation like in Argentina or Turkey?
It's not like lenders won't notice if the USA tried to print its way out of debt.
2. Do you think Americans would tolerate having a government that purposefully suppresses their purchasing power through structurally low wages, and buying up foreign assets to supress the value of their own currency?
3. The part where China spends all their cash to buy US Treasuries to supress the value of their currency wouldn't really work as well for the USA when international trade is dollar denominated anyways, and the bulk of their GDP comes from domestic consumption.
4. The USA has a deficit. It'd need to borrow even more in order to finance the suppression of their currency, whereas China just redirects the money they earn from export surpluses.
1. Extremely painful to Americans, and became one of the main pillars of their election.
2. Nowhere near high enough to cause any reduction in the USA's debt burden.
I think modern Americans are way too soft to even imagine the sort of inflation that'd be required to erase their debts. Things have been too good and too stable for too long to understand what country-wide economic hardship would be like, and even if they somehow decided to choose that path, they'd panic quit it long before it was done long enough to have any effect.
For historical context, this is exactly what happened when the US was on the brink of leaving the gold standard.
> From 1963 to 1966, France secretly implemented Operation Vide-Gousset to repatriate 3,313 tons of gold reserves from the Bank of England and the New York Federal Reserve. It took over 44 boat trips and 129 flights to export the gold back to the Banque de France. Since France converted its dollar holdings into gold, the French made out well when the dollar fell during the Bretton Woods period and lost 96% of its value against gold. France then withdrew from the London Gold Pool in 1966 after recovering its gold holdings to force the US to endure heavier losses.
https://www.armstrongeconomics.com/markets-by-sector/preciou...
the scale of problem is much worse when Haiti was forced to pay France a debt for freeing itself of slavery. Having to produce physical goods and sell them is much harder than giving out paper or adjusting numbers
Inflating away your currency has the same effect with the added downside of destroying your economy simultaneously.
________
In fact, the only time I can really see the argument for wanting the ability to inflate away currency to escape debt is if the country is weak and in a precarious enough position that they are legitimately worried that actually formally defaulting would lead to an invasion.
That is, suppose two countries both have $100B in debt. One of them is a small island nation; the other is a global superpower. Obviously the global superpower will be better able to handle that - dividing by GDP helps make that clear.
However, this simple division doesn't tell you some important things. How much of the debt comes due very soon? It's worse if the answer is "most of it." How was it incurred? "Winning a war" is much better than "losing a war."
The United States has lots of debt, and personally I'm worried about the long term serviceability of it. But the ratio to GDP isn't why!
The problem is if nobody wants to buy new bonds, of course.
> US 30-year Treasury yields just hit 5.2% — the highest level since July 2007. UK gilt yields are at levels not seen since 1998. Japanese bond yields are at record highs. Something is happening in global bond markets, and it's not just about inflation. In this video I explain what's driving the global rise in long-term borrowing costs, why the era of free money is probably over, and what fiscal dominance means for central bank independence. I cover the history of US presidents fighting with the Federal Reserve — including LBJ shoving his Fed Chair against a wall — the 1970s UK economic collapse, the Liz Truss mini-budget crisis, the role of private credit and off-balance-sheet SPVs in financing the AI boom, and what all of this means for the new Federal Reserve Chair Kevin Warsh.
It is the ultimate tragedy of the commons.
None of this will get solved until a crisis
You guys are too powerful.
And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
How so.
> Do you really think lenders
A government with its own sovereign currency doesn't need lenders. In fact, it is the government that allows lenders to lend money - not the other way around.
> Anyways, here's a new loan at the same terms as last time." ?
Why would they need to get a loan for from a lender?
> How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
Do you think that printing money automatically causes inflation? How does that work? Do people have some kind of magical device, or is it a physical phenomenon that can be measured? Of course not. Printing money only causes inflation if it is spend in a way exceeds the capacity of the market.
> Printing money only causes inflation if it is spend in a way exceeds the capacity of the market.
Yes? So you acknowledge that the market has a capacity?
Not w.r.t. to "financing" the US.
> Yes? So you acknowledge that the market has a capacity?
Yes, of course.
There's a LOT of reasons for them to not want to do that, and the status quo benefits a lot of other powerful players as well, but screwing up treasuries would be a quick way to change that math.
One can get away with being an asshole only so long.
And that's not a problem that's solvable with military might! "Investors around the world are declining to buy US government bonds" can't be bombed the way an oil refinery can be.
This bad boy can hold a LOT of debt.
>As a share of federal revenues, federal interest payments rose to 18.5 percent by the end of last year, exceeding the previous high set in 1991.
https://www.pgpf.org/programs-and-projects/fiscal-policy/mon...
And I say that as an absolute hater of how the pols run the place (yes both sides. One for having no sense of how to manage money and the other having some sense but ignoring it; one of these is objectively worse than the other (yep, I said it, objectively!)).
Seems like the end goal is not to have a country left but instead a bunch of factions more likely to be at war fighting over cash, resources and culture issues. Depressing as fuck for those of us not excited about that end goal.
And that's excluding the huge amount of multi tiered private credit.
While this is not an indication of anything bad on its own it definitely creates the conditions for cataclysms.
It's like being on a very very dry hay field, it does not mean that you're bound to die on fire, it just means that the risks of a fire being extremely destructive are high.
On the contrary, trivial amounts of money with usury can ruin you financially.
Sounds like a great idea, right? But what if something out of your control[1] happens, and average interest rates on the debt burden go up from 2% to 14%? The USA can't afford to just pay off all of its debts. It must continuallly roll over it's old debts to new debts, and could easily find itself in a situation where debt servicing costs go up by an order of magnitude if the fiscal situation changes for long enough.
[1] Or in the case of the United States, you do something very stupid and very inside of your control
So the interest rates are the yield rates of said bonds, and if the dollar were undergo hyperinflation, then said debt would inflate away.
Sure, that would mean getting future financing would be difficult and expensive for the US, but that's a problem down the line, and goes beyond just the current debt.
For the record, I do not agree with current US foreign or domestic policy, but I wouldn't say it doesn't serve current US financial interests.
This is a fantasy. Do you really think lenders would just not notice if America inflated its currency away to get rid of its debts, and they'd just say "aw shucks you got us. Anyways, here's a new loan at the same terms as last time." ?
And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
In almost all cases, you're better off just defaulting on loans than pursuing hyperinflation. The reason to go for hyperinflation is if you're worried about your creditors invading you for defaulting.
And when was the last time that happened? Pretty much only during inflation spikes. The vast majority of time, inflation is around 2% or maybe 3 or 4 recently, 10 year Treasury yields is well above 4.5%.
So maybe you have 40T USD lying around, and you're willing to lend it all to uncle Sam for inflation -.1%. if that's not the case then it's finance 101, and wishful thinking
Roughly, so long as a government can borrow cheaper than nominal GDP growth (assuming a relatively constant ability to tax that growth), then the debt burden doesn't really grow, because your ability to finance the debt grows faster than the debt.
But the problem is that the USA hasn't even cleared this bar, and its debt burden is growing, and there's also the additional risk that if borrowing costs go up due to a lack of confidence in the US government or global instability, even the current debt pile could be unmanageable.
Applies only if you are the reserve currency, label everyone else who don't use your currency the way you want it as currency manipulators and you can take whatever debt you want because well the printer can pay everything back in the future.
Countries put up with it because the US "provided protection" and insured maritime freedom of navigation. Oh wait ...
It appeared to drop from the 2020 highs, yes.
But it's definitely trending upward.
It's too late for my kids but if i'm ever lucky enough to have grandkids part of their bday and Christmas gifts will be deposits.
123% comparatively speaking isn't great, but it's not shockingly terrible.
The "masses" are well aware of crypto at this point and BTC is down 47% over this past year. It's just not that useful unless you're trying to skirt laws/regulations[1] or LARPing as a sovereign citizen.
1: Yes, I know, BTC is not even good pick for financial crimes either.
...Actually I have an NFT of some beachfront property.
If you're not - this is the 10th worst ratio in the world. The only countries worse are: Venezuela, Japan, Sudan, Singapore, Eritrea, Bahrain, Greece, Lebanon, and Italy. The difference has historically been that we've been able to exploit the dollar, export our inflation, and so on - but those times are fading.