U.S. Debt Swells to Record $37 Trillion, Trump’s Push for Rate Cuts Intensifies

TradingKey - According to the U.S. Treasury’s latest report on Tuesday, August 12, the national debt has climbed further and surpassed $37 trillion for the first time in history.

The U.S. government’s massive borrowing is widely known, but the pace of debt accumulation is alarming. The U.S. national debt surpassed $34 trillion in January 2024, rose to $35 trillion six months later, and reached $36 trillion just five months after that, in November 2024.

Michael Peterson, CEO of the Peter G. Peterson Foundation, noted that the U.S. government is now adding $1 trillion in debt every five months — more than twice the average pace over the past 25 years.

The Congressional Budget Office (CBO) projected in January 2020, just before the pandemic, that total federal debt would not reach $37 trillion until the 2030 fiscal year. The government’s debt accumulation has clearly outpaced that forecast.

The Joint Economic Committee estimates that, at the current daily growth rate, it will take approximately 173 days for the debt to increase by another $1 trillion.

Economists warn that increased government borrowing raises upward pressure on interest rates, imposes additional costs on everyone, and reduces investment in the private sector. More dangerously, it could create a long-term vicious cycle: borrow more, pay higher interest, and then borrow even more...

This is precisely what President Donald Trump wants to avoid, as his current economic policies — including tariffs — are aimed at addressing the nation’s massive debt burden.

Trump has repeatedly emphasized that he wants Fed Chair Jerome Powell to cut interest rates quickly to reduce the government’s debt burden and stimulate economic growth.

To push the Fed toward rate cuts, Trump has employed a range of tactics: identifying potential Fed chair candidates who support his rate-cut agenda, appointing “MAGA-aligned” Stephen Miran to the Fed Board, installing “MAGA-aligned” EJ Antoni as head of the Bureau of Labor Statistics, making political issues out of the Fed headquarters renovation, and — according to recent reports — considering filing a major lawsuit against Powell.

Although Trump claims that a 3-percentage-point rate cut could save $1 trillion in interest costs, JPMorgan warns that unless macroeconomic conditions truly warrant it, such cuts could trigger higher inflation and a rise in nominal interest rates.

Deutsche Bank has calculated that even if Trump were to fire Powell directly, the U.S. Treasury would save only $12 billion to $15 billion in interest costs by 2027, as the savings from lower short-term rates would be offset by higher long-term rates.