Born in debt, living on credit: America’s $36 trillion tab

On the 249th anniversary of independence, the story of America’s national debt reveals a legacy of wars, tax cuts, and political choices that future generations may be forced to repay.

By Naira Ismail

In September 1776, just two months after declaring independence, the fledgling United States borrowed money for the first time. France and the Netherlands stepped in with a loan of $181,500, a princely sum at the time, worth just under $5 million today. The purpose: to help finance the Revolutionary War.

Fourteen years later, in 1790, the young republic turned inward for funds, as the First U.S. Congress approved a sweeping $75 million package (about $2.4 billion today) to consolidate federal and state debts.

Thus began America’s enduring, and ever-expanding, habit of living on borrowed money.

Fast forward to today: As the United States marks its 250th Independence Day, the federal debt stands at a staggering $36.2 trillion; to be precise $36,218,227,932,466 as of 9:35 a.m. EDT, according to the Peter G. Peterson Foundation. (By the time you read this, it will have grown even higher.) On a per capita basis, every man, woman, and child in the country now carries a debt burden of $106,106.

That’s precisely why the national debt has become such a contentious issue. A key reason many lawmakers opposed the recently passed One Big Beautiful Bill Act was its projected addition of at least $3 trillion to the debt in the next nine years. With the debt already at historic highs, it’s more important than ever to pause, reflect, and understand how we arrived at this staggering figure.

In the early years of the Republic, borrowing wasn’t just necessary—it was strategic. The fledgling nation had limited options, and its leaders, including the Founding Fathers, understood that debt was a tool for survival and growth. Alexander Hamilton, the first Treasury Secretary, famously championed a national bank and the federal assumption of state debts as the foundation for building public credit and a stable economy.

One not-so-surprising thread running through the history of America’s national debt is the role of war. Major conflicts have consistently driven up borrowing.

In the 19^th century, the Civil War resulted in a notable surge, bringing the debt to over $2.7 billion, particularly through issued bonds and increased taxation.

In the last century, by the end of World War II, the national debt exploded to $269 billion, a result of large-scale wartime mobilization across continents.

While it’s difficult to pinpoint an exact percentage, historians and economists estimate that 50 percent to 60 percent of the debt accumulated before the 21st century stemmed from war-related spending. Even in this century, military engagements in Afghanistan and Iraq added significantly to the debt, with taxpayer costs exceeding $3 trillion.

It’s worth noting that the United States became debt-free for the first—and only—time during the presidency of Andrew Jackson, a period notably free of foreign entanglements. Domestically, however, Jackson waged a ruthless and violent campaign against Native American nations, most infamously resulting in the Trail of Tears.

Secondly, it’s important to note that while the nominal debt remained after the world wars, the debt-to-GDP ratio steadily declined, a result of strong economic growth outpacing the accumulation of new debt.

Even though this era saw the introduction of major government programs, such as Social Security, Medicare, and Medicaid, which significantly expanded the federal budget, robust economic growth helped the country keep debt levels manageable.

Tax cuts have also been a major driver of ballooning national debt.

The modern trajectory of U.S. debt took shape in the early 1980s under President Ronald Reagan. Sweeping tax cuts, combined with a surge in defense spending and limited efforts to rein in entitlement programs, caused the national debt to nearly triple—from $900 billion in 1980 to $2.6 trillion by the end of Reagan’s presidency.

These changes were the product of Reaganomics, an economic philosophy centered on shrinking the role of government through tax reductions. They also reflected a growing consensus in Washington that political capital was better spent on promoting growth than enforcing fiscal austerity.

In 1981, at the beginning of the Reagan presidency, the debt-to-GDP ratio was about 31 percent. However, despite strong growth, the ratio increased to 39 percent by 1988, when he left office. It reached 48 percent by the time George HW Bush was voted out in 1982.

The economic boom of the Clinton era reversed the debt accumulation trend slightly. A combination of tax increases, spending restraints, and a tech-driven economy created a surplus by 1998.

But the 21st century brought its own set of challenges to the national ledger.

After the September 11th terrorist attacks, President George W. Bush launched costly wars in both Afghanistan and Iraq, passed new domestic security programs, and approved sweeping tax cuts. While these measures were politically popular, they were costly. By the time President Bush left office in 2009, the debt had nearly doubled again, topping $10 trillion for the first time.

What followed was the Great Recession, which prompted an extraordinary government response. The crisis was marked by bank bailouts, massive stimulus packages, and plummeting tax revenues, all of which significantly expanded the federal deficit.

President Barack Obama inherited a fiscal crisis and responded with aggressive spending in an attempt to stabilize the economy.

U.S. debt continued to accumulate, hitting a whopping $19.5 trillion by the time he left office in 2017. While the deficit began to narrow toward the end of his presidency, the total debt continued to rise due to both entitlement growth and interest costs.

Then came one of the most dramatic spikes in U.S. debt in 2020. Faced with the COVID-19 pandemic, Congress passed multiple relief packages under both Presidents Donald Trump and Joe Biden, totaling more than $5 trillion. These included direct payments to Americans, enhanced unemployment benefits, aid to small businesses, and fiscal support for both hospitals and vaccine efforts.

By the end of 2021, the national debt surpassed $28 trillion — a more than $7 trillion increase in under two years. The debt-to-GDP ratio breached 125%, the highest since World War II.

Supporters argued the emergency spending was necessary to prevent a full-scale depression. The economic rebound was quick, but the inflation forced the Federal Reserve into a cycle of interest rate hikes. Debt became more expensive to service.

With the national debt nearing $37 trillion, interest payments alone are projected to exceed $1 trillion annually within the next year, surpassing even the nation’s defense budget.

What’s next?

As the “One Big Beautiful Bill Act” becomes law, it is estimated to add $3 trillion to the national debt by 2034. Over a 30-year horizon, the cost could balloon to between $15 trillion and $31 trillion if the legislation is made permanent, according to the Committee for a Responsible Federal Budget.

Economists are divided. Some, especially advocates of Modern Monetary Theory, argue that the U.S., as the issuer of the world’s reserve currency, can sustain high debt levels as long as inflation is controlled and growth continues.

Others warn that rising U.S. debt crowds out private investment and limits future stimulus flexibility, making the nation vulnerable to fiscal crises. The Congressional Budget Office (CBO) projects debt will exceed 130% of GDP by 2035 if these trends continue.

At its core, the national debt tells the story of America’s past choices and present priorities. It reflects moments of war and peace, growth and transformation. Debt itself is not inherently bad; it can serve as a powerful tool for investment and progress. But when left unchecked, it risks becoming a heavy burden, one that future generations may be forced to bear.

(Naira Ismail is a rising senior at Poolesville High School, Maryland.)