Last week, the federal government’s gross debt exceeded $37 trillion for the first time ever. This limit allows for an increase of trillions more since President Donald Trump recently enacted the one big beautiful bill law (OBBBA).
On July 4th, Trump signed the OBBBA, which raised the debt limit by $5 trillion. This move effectively averted a potential standoff over borrowing limits that could have escalated later in the summer. Without this increase, the risk of default on U.S. debt obligations could have jeopardized financial markets and driven up interest rates to account for that risk.
Both political parties have used debt restrictions as leverage in negotiations over federal spending and tax policies. However, this has led to downgrades of the U.S. credit ratings by three major agencies since 2011.
As of August 15, 2025, the national debt stands at over $37 trillion, which implies a significant liability for each American taxpayer.
Experts have expressed concerns that while the inclusion of measures in the OBBBA helped avoid immediate risks, it did little to foster meaningful discussions about the nation’s unsustainable fiscal path.
Maya McGuineas, chair of the Committee for a Responsible Federal Budget, echoed these sentiments, noting that policymakers managed to approve what is now the largest settlement bill and consequently the largest hike in debt limits in U.S. history.
Even with increased tariff revenues, the U.S. budget deficit has grown by $100 billion over the past year. Some experts suggest that the OBBBA might have been the first instance where such a bill was considered through the budget adjustment process, resulting in a potential debt increase of $3 to $4 trillion.
Concerns about a financial crisis loom large, with warnings being issued about the dangers of unchecked deficit spending, which has been likened to an “economic heart attack.”
With debt limits now $5 trillion higher than at the start of the year and reaching over $41 trillion, lawmakers anticipate that it might be several years before these limits are approached again. However, skepticism remains about the likelihood of serious discussions regarding fiscal reform.
There are various proposals circulating in Congress aimed at reforming debt limits, such as establishing a Finance Committee for budget reforms or introducing legislation like the Responsible Budget Compilation Act. The latter seeks to minimize the adverse effects of debt restrictions on the economy by allowing temporary suspension of limits in exchange for congressional action on specific debt reduction initiatives.
