America’s $38 Trillion Debt Machine

Shutdown politics, a trillion in ten weeks, and a 3 percent deficit plan built on tariffs, trust-fund maneuvers, and safety-net cuts.

On October 21, 2025, as members of Congress bickered over whether to keep the federal government’s lights on, the U.S. gross national debt quietly crossed $38 trillion.

The milestone itself isn’t shocking. Everyone’s been watching this train wreck in slow motion for years.

America added the last trillion dollars in roughly ten weeks, the fastest pace outside the COVID-19 pandemic. For context: it took 219 years to accumulate the first $10 trillion. The last $10 trillion? Less than five years.

Treasury Secretary Scott Bessent stood before the House Appropriations Subcommittee and reached for a baseball metaphor. The United States, he said, is on the warning track regarding its debt limit. When you’re there, the wall’s not far away.

Then he made two promises that cannot possibly coexist: America will never default, and the Treasury will not use any gimmicks.

This is the fiscal equivalent of promising to quit drinking while actively mixing a martini.

Bessent, a former Soros Fund Management partner who made his fortune betting against the British pound and the Japanese yen, now finds himself managing a debt load accelerating like a runaway freight train. His solution? A three-part plan that, when the numbers get checked, reveals itself as one of the most brazenly regressive fiscal schemes in modern American history.

Poor people paying for tax cuts for the rich, wrapped in the language of fiscal responsibility.

Start with what Bessent has already promised the wealthy. The 2017 Tax Cuts and Jobs Act is set to expire, and he’s prioritized extending its provisions, primarily individual and estate tax cuts that overwhelmingly benefit high earners. This commitment immediately drains 1.1% of GDP from potential revenue.

His headline goal sounds reasonable enough: cut the federal deficit to 3% of GDP by 2028. Analysts agree this target, if achieved, would stabilize the debt-to-GDP ratio over time.

The problem isn’t the destination. It’s the route chosen to get there.

To hit that 3% target, the plan needs offsets equivalent to roughly 4% of GDP. Here’s where things get ugly.

Mandatory program cuts: 1.4% of GDP. Not from the big enchiladas. Social Security and Medicare remain untouched, too politically radioactive. Instead, the target list reads like a greatest-hits compilation of programs that keep poor Americans alive: Medicaid, SNAP, veterans’ benefits.

To generate 1.4% of GDP in savings, these programs would need to be slashed by nearly one-third.

Tariffs: 1.3% of GDP. Here’s the real sleight of hand. To make up the revenue shortfall, Bessent proposes a 20% tariff on all imported goods and a punishing 60% tariff on Chinese imports. The administration frames this as tough on China trade policy.

What it actually represents is a massive, regressive consumption tax. These tariffs will increase annual costs for the typical American household by $2,200 to $3,900.

Picture a working-class family already watching grocery prices climb. Now everything from electronics to clothing to auto parts gets 20% more expensive overnight, 60% if it came from China. Meanwhile, the wealthy family who just kept their estate tax cuts? Sure, their imported Bordeaux costs more, but they’re not choosing between food and rent.

This is a shell game where poor and middle-class Americans pay twice for rich people’s tax cuts: once through gutted social programs, again through inflated prices on everything they buy.

Back to Bessent’s promise about gimmicks.

Treasury has a whole playbook of extraordinary measures that get deployed when Congress refuses to raise the debt ceiling. These include suspending reinvestment in the Government Securities Investment Fund, which happens to be the primary retirement vehicle for federal employees. They raid the Civil Service Retirement and Disability Fund. They tap the Exchange Stabilization Fund.

Legal? Yes.

Gimmicks? By any honest definition, absolutely.

Treasury temporarily borrows from federal workers’ retirement accounts to pay bondholders because Congress won’t authorize the borrowing directly. Eventually, assuming Congress acts, these funds get restored with interest. But the need to deploy them at all represents a profound governance failure.

The most sophisticated financial minds in government are reduced to playing three-card monte with trust funds because the legislative branch cannot execute its basic constitutional duties.

The $38 trillion milestone arrived during a federal government shutdown. The symbolism is almost too perfect: America’s debt growing at record pace while the government is literally closed because Congress can’t agree on basic funding.

If Congress can’t pass routine appropriations, literally the most basic function of the legislative branch, what makes anyone think they’ll handle a debt ceiling crisis with maturity and foresight?

The shutdown proves they won’t. It guarantees the next debt limit fight will be equally destructive, a game of chicken where the global financial system serves as hostage.

Here’s the feedback loop from hell: Interest payments reached nearly $1 trillion in fiscal 2025, more than the entire defense budget. Over the next decade, Treasury projects $14 trillion in interest costs alone, up from $4 trillion in the previous decade.

Those payments don’t disappear into the ether. They represent real money flowing out of productive public investment and into debt service. Want to rebuild bridges? Fund cancer research? Expand childcare? Sorry, those dollars are already committed to bondholders.

Now layer in Bessent’s tariff plan, which will directly increase prices on imported goods, adding fuel to existing inflationary pressures. Rising prices erode purchasing power, making it harder for middle-class families to buy homes or save for retirement, the exact outcomes the administration claims to oppose.

The administration wants credit for reducing the deficit by $350 billion compared to the same period in 2024. This sounds impressive until the disconnect becomes obvious: How can the deficit be shrinking while gross national debt is accelerating at record pace?

Short-term cash-flow accounting versus long-term structural reality. Temporary revenue windfalls can make the deficit look smaller on paper while the underlying imbalance continues to explode.

It’s like bragging about monthly credit card payments while total balance keeps climbing toward the limit.

Scott Bessent made his fortune betting against currencies and sovereign debt. He profited when the British pound collapsed on Black Wednesday. He netted $1.2 billion for Soros Fund Management shorting the yen. These trades required identifying structural weaknesses, anticipating political failures, and timing the market’s recognition of unsustainable positions.

Now he’s running Treasury, and the same pattern-recognition skills that made him wealthy should be flashing warning lights. The U.S. fiscal position in late 2025 exhibits every hallmark of an unsustainable trajectory: accelerating debt growth, political paralysis, inflationary pressures, and markets increasingly skeptical of the government’s ability to manage its obligations.

The trader in Bessent should see the warning signs.

The Treasury Secretary in Bessent has to pretend they’re manageable with three simple goals and no gimmicks.

Which is scarier? A Treasury Secretary who doesn’t grasp the severity of the crisis, or one who does but can’t admit it publicly because honesty would tank the markets?

Bessent’s baseball metaphor is actually more apt than he might have intended.

In baseball, the warning track is a strip of different material, usually dirt or gravel, that alerts outfielders they’re approaching the wall. It exists to prevent collisions at full speed.

But here’s the thing about warning tracks: they’re short. By the time the texture change gets felt beneath the feet, not much room remains to stop. The commitment is already made, to the catch or the crash.