America’s Debt Spiral Deepens as Treasury Heads Toward $2 Trillion Borrowing Year

The original story by Eleanor Pringle for Fortune.

The US government is on track to borrow more than $2 trillion this fiscal year just to keep the lights on, according to fresh estimates from the Treasury Department – a pace of debt accumulation that’s rattling economists, budget watchdogs and even some longtime Washington insiders.

New Treasury refinancing documents released Wednesday showed the White House’s Office of Management and Budget now expects the 2026 fiscal year deficit to hit roughly $2.06 trillion. That’s even higher than the Congressional Budget Office’s already eye-watering projections.

The fiscal year ends Sept. 30. By then, Washington will have added debt at an average rate of more than $166 billion every month.

And the borrowing binge isn’t expected to slow down. The administration projects the 2027 deficit will climb to $2.17 trillion, pushing the monthly average closer to $181 billion.

America’s national debt is now creeping toward the $39 trillion mark. Treasury data shows it currently stands at about $38.9 trillion, and interest payments alone are starting to swallow a staggering chunk of federal spending.

Between October 2025 and March 2026, the government paid nearly $530 billion just to service its debt, according to preliminary CBO figures released last month. That works out to more than $88 billion a month in interest costs – or roughly $22 billion every week.

The bill has become so large that debt interest payments are now rivaling what the government spends on education and defense combined.

For deficit hawks, the numbers are flashing red.

“$2 trillion deficits used to be unheard of,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in response to the Treasury update. “Then they only occurred during major recessions. It’s beyond scary that $2 trillion deficits are now the norm.”

Her warning reflects a growing concern on Wall Street and in policy circles that investors may eventually lose patience with America’s borrowing habits. So far, global markets have continued buying US debt, but critics argue that confidence can erode slowly and then all at once.

Frederick Kempe, president and CEO of the Atlantic Council, said the danger isn’t theoretical anymore.

“Trust doesn’t collapse overnight,” Kempe wrote in a blog post. “It slips incrementally until the terms on which the United States borrows, invests and leads begin to change.”

Higher debt levels can ripple far beyond Washington balance sheets. Rising government borrowing tends to push up interest rates across the economy, making mortgages, business loans and credit more expensive for consumers. Economists also worry that mounting debt payments could crowd out investments in infrastructure, education and technology at a time when competition with China is intensifying.

The latest deficit projections also throw fresh cold water on bipartisan calls to cap annual deficits at 3% of GDP – a benchmark many economists already viewed as ambitious.

Right now, the US deficit sits above 6% of GDP, roughly double that target.

Reaching the 3% threshold by 2036 would require around $10 trillion in deficit reduction over the next decade, according to budget analysts. That would almost certainly mean some combination of spending cuts, tax increases, or both – political choices Washington has repeatedly avoided.

“As policymakers increasingly gravitate toward the idea that deficits should move closer to 3% of GDP, today’s news shows just how far we are from that goal,” MacGuineas said. “Things are getting worse, not better.”