Under Middle East Conflict, U.S. Federal Debt Breaks 39 Trillion Dollars for the First Time

Reprinted from: Caixin

On Wednesday, the total U.S. national debt surpassed $39 trillion for the first time, coinciding with just weeks after the U.S.-Israel coalition launched military action against Iran.

Data released by the U.S. Department of the Treasury on Wednesday shows that as of March 17, the total U.S. federal debt reached $39,016,762,910,245.14.

This milestone of surpassing $39 trillion comes just about five months after the total debt first hit $38 trillion in late October 2025; prior to that, in mid-August last year, the figure had just crossed $37 trillion.

This unprecedented number highlights conflicting priorities within the U.S. government: from passing large-scale tax laws, increasing defense spending, and strengthening immigration enforcement, to reducing the debt itself — a goal that Trump promised during his campaign and after taking office.

As the population ages and federal spending on Social Security and Medicare increases, the U.S. national debt has grown rapidly over the past decade. Another key driver of the debt surge is interest payments on the debt, which have risen sharply due to rising interest rates aimed at curbing inflation and the growing debt itself.

Michael A. Peterson, CEO of the nonpartisan Peter G. Peterson Foundation, said that reaching this new milestone in national debt offers Americans an opportunity to “recognize the shocking speed of this growth and the heavy financial burden we are passing on to future generations.”

Over the past nearly 20 years, whether under Republican or Democratic presidents, U.S. federal debt has surged, with recent growth mainly driven by wars, large-scale pandemic response spending, and tax cuts.

For example, recent “big-spending” areas include Middle East conflicts. White House economic advisor Kevin Hasset estimated on Sunday that the Iran war has already cost the U.S. over $12 billion so far. It’s unclear when this conflict will end. Additionally, a report released on May 5 by the Center for Strategic and International Studies estimates that U.S. military costs during the first 100 hours of operations amounted to $3.7 billion, or about $890 million per day.

According to The Washington Post, the U.S. Department of Defense has requested approval from the White House to seek over $200 billion in additional budget from Congress for the Iran conflict.

Could the debt climb to $40 trillion before the midterm elections?

The Congressional Budget Office (CBO), an independent government agency, has outlined some impacts of rising government debt on Americans — including higher borrowing costs for mortgages and auto loans, reduced corporate investment leading to lower wages, and rising prices for goods and services.

Proponents of balanced budgets also warn that the long-term trend of expanding borrowing and increasing interest payments will force Americans to face tougher fiscal choices in the future.

Peterson pointed out, “At the current rate, our national debt will reach an astonishing $40 trillion before the midterm elections this fall. Borrowing trillions upon trillions at such a rapid pace without any plan is the very definition of ‘unsustainable.’”

He further stated that, given voters’ concerns about living costs, the costs of debt and its economic impact on Americans’ livelihoods should become a key topic in this year’s midterm debates.

“America faces complex and serious challenges domestically and internationally. Putting debt on a sustainable path will help build a stronger, safer future. The good news is that there are many solutions available, and all should be discussed during this election season,” Peterson added.

With rising expenditures on Social Security, Medicare, and debt servicing costs, the federal government is expected to face ongoing fiscal headwinds in the coming years, likely leading to further increases in the budget deficit.

The Congressional Budget Office previously released a ten-year budget and economic outlook, projecting that the annual budget deficit will rise from the current approximately $1.9 trillion to $3.1 trillion in ten years. This would push the total national debt from about $39 trillion now to $63 trillion by 2036.

The share of debt held by the public relative to Gross Domestic Product (GDP)—a common measure used by economists to gauge a country’s debt relative to its economic size—will increase from about 100% this year to 108% in 2030, and further to 120% in 2036. These figures would break the 1946 record of 106%, when the U.S. was transitioning from wartime to peacetime after World War II.