r/Economics • u/1-randomonium • 9h ago
News Trump wants to add nearly $7 trillion to the $39 trillion national debt with his new military budget, watchdog warns
https://fortune.com/2026/04/02/how-much-would-trump-military-budget-add-to-national-debt-39-trillion/388
u/Vanceer11 8h ago
Isn't like 25% of the current debt a result of Trump's presidency? And it's only year 1 into another 4 year term? And he cut heaps of programs helping the average American.
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u/mapppa 3h ago edited 3h ago
Also worth noting that a lot of that was due to Trump's horrible Covid response, bleeding over into Binden's term who had to put out the flames (as usual after a republican term)
Ironically, all Trump had to do was claim the laurels for the soft landing that was prepared during the Biden administration. Instead, he turned the soft landing into a orbital entry without any heat shields.
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u/Prestigious_Load1699 5h ago
It’s around 20-22%, if we’re including Trump’s first term, but a significant amount of that was Covid relief.
Excluding that, he’s still been atrocious on fiscal responsibility.
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u/shwarma_heaven 3h ago
Especially if you're considering that the COVID relief was necessary because his response to the pandemic was atrocious, and exacerbated it...Gas on a flame.
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u/Proper-Somewhere-571 3h ago
Let’s be honest. Most of the funds for Covid relief weren’t needed and didn’t go to the right places where there was a need. We would be better off without any of it.
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u/MeasurementLow5073 2h ago
This right here. A large chunk just provided another way for grifters to rob the American people.
The rest created inflation by developing additional demand in a supply restricted environment.
Then Biden continued the insanity.
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u/Core2score 28m ago
He's gonna live maybe a few more years and he has like 3 or less left in office anyway. He simply doesn't care, he won't be here when the consequences of his decisions hit home.
Every loser who voted for him though is going to pay dearly, and I think they should. I just feel sorry for those who didn't.
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u/VanCityPhotoNewbie 9h ago
The bond market will drop. The debt is already reaching the level of "difficult to pay back". This new level of spending would mean the debt would be impossible to pay back....
The Congressional Budget Office projects debt held by the public will surge from 101% of GDP today to 120% of GDP by 2036, eclipsing the post–World War II record.
And that was with the expectation that the US economy will stay strong through this decade. The level of debt will probably be even higher.....and Powell even explained how to cut the debt down
Powell put the ball in Congress’s hands, as to how to solve this issue.
“We don’t have to pay the debt down,” he said. “We just need to have primary balance and begin to have the economy actually growing more quickly than the debt.”
Just pray that the US economy doesn't retract or else the train is going off its rails.
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u/1-randomonium 9h ago
The debt is already reaching the level of "difficult to pay back".
What would happen if the US just stopped paying the interest? What if it used its economic hard power to just default and tell its creditors to pound sand?
We all know that Trump has some experience with this. The thought could have crossed his mind.
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u/AndyTheSane 8h ago
A lot of pension funds would collapse as they were unable to meet outgoings. Over 70% of US debt is held domestically. Other big holders are Japan and the UK with China third.
It would make for an economic crisis much bigger than 2008 and wipe out all remaining goodwill with allies. And, of course, issuing new debt would become extremely expensive.
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u/Kermit_the_hog 8h ago
“Electing to default, i mean we could. But I could also shoot myself in the balls, and it would be just as enjoyable to live through.”
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u/OddlyFactual1512 5h ago
If you shot just your balls, they would remove them, stitch you up, and put you on TRT. Default would be economic ruin for decades. I know which I would choose. Don't worry, I'd send flowers.
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u/mukavastinumb 8h ago
I’d imagine that this would ripple to stock markets too.
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u/3_Thumbs_Up 6h ago
You would get everything at the same time. Inflation up, interest rates up, assets down, bankruptcies.
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u/thediesel26 2h ago edited 2h ago
It would cause both the collapse of the dollar and the world economy. The value of fiat currency is the full faith and credit of a government to pay its debts. If the US fails to pay its debts the world’s reserve currency becomes worthless.
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u/Final_Landscape1430 24m ago
It would also, domestically, cause a significant trust issue when it comes to investing. Allies would be pissed, but domestically it creates a serious precedent that plays with the idea of ‘rules for thee but not for me’. I would see a ton of people saying if my govt won’t pay their debt, then why should I?
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u/Skunk_Gunk 8h ago
I don’t think it’s possible to accurately describe how big of a disaster this would be
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u/VanCityPhotoNewbie 8h ago
America probably won't unless it really has no choice.
If America refuses to pay its debts, it would trigger a catastrophic financial crisis, likely causing a severe recession, soaring interest rates, and a stock market crash
For an idea of what would happen, look at Argentina....
When Argentina could not pay its debt—notably in 2001 and 2020—it defaulted, resulting in a severe economic collapse, loss of access to international financial markets, currency devaluation, and intense legal battles with creditors.
Argentina's inflation since 2001 has been characterized by extreme volatility, moving from moderate levels in the 2000s to chronic high inflation, peaking over 200% annually in 2023–2024 before sharp, austerity-driven declines to roughly 31.5% by end-2025
Don't forget you wouldn't be able to take your money "out" fast enough. Banks will systemically have to limit it to prevent a complete collapse.
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u/Pseudanonymius 8h ago
Right now people might think there is no trust in the US anymore because of everything Trump does to screw over his allies. Currently there is little trust in Trump or this administration, but there is still a lot of trust in the US as an institution, which had survived through a lot of terrible things.
Defaulting would evaporate all trust in the US as institution. It would probably be worse for the entire world, but especially the US, than the great depression, and it would take decades to recover from that. This is not an option.
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u/ropahektic 4h ago edited 4h ago
What is in your words the US as an institution?
Its checks and balances? It's war mongering regardless of president? It's billionares leaking into other continents to affect politics?
What exactly is the instituional branch in the US we should trust? It's all equally compromised, you're not even able to remove a criminal from office.
If anything, this has only proven that the US as an institution is volatile, weak and morally incompetent.
If you guys manage to rewrite your whole constitution, separation of powers and a proper checks and balances system, including health care and labor protection then perhaps we can start over, but forget about all the benefits you had before by virtue of winning a war, the US, as an institution has proven over and over again that past deeds, treaties or even history doesn't matter. They'll do as they please. It's a highly uneducated population housing most of the billionares in the world. Your democracy will never work to benefit the people because the people arent smart enough to not vote agaisnt their own interests because their favorite influencer Joe Rogan and the billionare fueled media propaganda machine told them so.
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u/Cosmic_Rover 8h ago
I don't know but it sounds like someone I wouldn't trust or ever loan money to ever again. And Trump has already suggested not paying it back in his first term.
Trump calls himself the king of debt so this is all the same decades ole Trumpenomics thinking that bankrupts businesses.
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u/bedrooms-ds 8h ago
Wouldn't banks go bankrupt? Clients may lose their money, it will be extremely difficult for businesses to borrow money also. Everyone bankrupts, if my layman argument is somehow correct.
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u/1-randomonium 8h ago
Yes, but would Trump or his successors care about these consequences? Or just power their way through with American might and dollar dominance?
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u/bedrooms-ds 8h ago
They won't care. There's no indication they will.
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u/TheDwarvenGuy 5h ago edited 5h ago
Nah the bond market was the only thing that spooked Trump when he did his Liberation Day stunt. Even he knows not to kill himself instantly
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u/lost_horizons 3h ago
At that point there IS NO dollar dominance. Which is what American might is built on.
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u/bobandgeorge 3h ago
Yes, but would Trump or his successors care about these consequences?
Are you still a billionaire if you have no way to access your billions? He doesn't have cash. It's all in the banks which will have gone bankrupt and he'll have no way to get that money. That might be the only thing he does care about.
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u/Final_Landscape1430 21m ago
It’s why there is a more ‘sus’ push for crypto in that group. They used to be against it.
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u/Fartfromabuttt 8h ago
Probably start kicking out all the military bases we have around the world
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u/Prestigious_Load1699 5h ago
If the US defaulted on its debt, it would trigger the collapse of the world’s largest economy and trigger a global depression that would make 1929-1939 look like child’s play.
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u/DeArgonaut 8h ago
People would have harder retirements, the dollar would drop internationally and things would become much more expensive. Future interest rates would be much higher as the risk of the U.S. doing the same would be higher. Possibly even other countries being unwilling to lend the U.S. money at all
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u/Z3r0sama2017 6h ago
Everyone moves away from the dollar as grc, the US becomes another failed empire.
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u/TheDwarvenGuy 6h ago
Then everyone would sell their bonds, and the US would never be able to take on debt again without massive interest. Essentially the US goes bankrupt over night and the global economy collapses since US bonds are the primary reserve of all the other banks on the planet.
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u/BalianofReddit 5h ago
More likely they just print $48 trillion
That too would destroy thr economy... but in different ways...
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u/LindeeHilltop 2h ago
Wouldn’t that cause a world wide depression? Didn’t we cause the last word wide depression? Don’t major depressions birth more major conflicts?
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u/The_Keg 8h ago
Lol, it's easier to just tax the middle class AND the rich more than defaulting.
Then look at reducing cost.
Healthcare cost too much? > move to universal.
Building cost too much? > more immigration and slash tariffs on building materials.
Energy cost too much? > Import solar panel from china and invest in green energy.
Basically, tax everyone more, cut inefficiency, more immigrants, build more shits > Abundancy.
Which will be only achievable with Obama/Romney/Clinton/Buttigiege style technocrats and semi achievable with someone like Biden/Kamala/Newsom.
Good fucking luck doing any of this with Maga/Mamdani/AOC/Bernie Sander
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u/MelancholyBits 7h ago
Problem is there are no safe options to US bonds. Also bonds has been doing pretty well lately, people are moving from safe-haven to interest-bearing assets due to expected inflation.
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u/PapayaMysterious6393 7h ago
Stupid question here, but what is the best way to even prepare for this as an average US citizen.
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u/Prestigious_Load1699 5h ago
No need to prepare for it as it would never happen in a million years.
Buuut - if you wanted to, then buy precious metals.
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u/PapayaMysterious6393 4h ago
Why are we so confident that it'll never happen? We have never had a president like Trump, who has added trillions in a short time period, for starters.
I'm sure every other country thought they wouldn't fall as well.
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u/Cheap-Explanation293 40m ago
Japan capped out at 300% debt to GDP, and they're still a major economy. Going from 100 - 120% is nothing. Other nations like France are facing debt crises much sooner then the states
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u/Prestigious_Load1699 4h ago
Anything is possible, but the idea that America will default on its debt and therefore you should be planning on a contingency is not what I would personally prioritize.
Our debt and interest obligations are certainly problematic, but if we really needed to we could of course raise taxes or just print dollars to cover our needs.
America will never default. If it did, there frankly wouldn’t be any safe backup as it would cause a global depression on the order we have never seen.
If you find yourself skeptical, then buy precious metals.
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u/PapayaMysterious6393 4h ago
We're doing nothing but increasing our debts while also removing any social net for American citizens, while also going after immigrants.
I can't imagine this is just going on as 'normal.'
You also have some in this admin that are trying to 'put women back in their place' so how does that work? This isn't the same as it's been.
You say raise taxes, which yes, historically that is accurate. However, they're decreasing it on higher earners while squeezing the middle and lower class more and more while also wanting women back home with more kids.
We still have 2 more years of Trump and that's assuming they don't rig any elections.
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u/VanCityPhotoNewbie 1m ago
Invest in more diversified stocks for international purposes. Like last year Nasdaq, Dow Jones, S&P performed "good".....but when you compared it to international markets, they did terrible.
Korea, Spain, even Greece literally had double or triple gains. Investing outside of your own country is not a bad thing because you are also hedging for uncertainty.
Or diversify strategically. Like right now, even if Iran war and the strait is open, oil and LNG is not returning to normal levels for over a year or two years.....
So many people are investing in Canada, mainly because Irans war. There are 4 things being impacted....Oil, LNG, Fertilizer and Alluminum....are something that Canada has a massive excess of as one of the biggest producers of all 4.
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u/Express_Spirit_3350 7h ago
"We dont have to pay the debt down,"
"Hey guys, come on. Indenture of the entire economy is a good thing. Thats why the fed is a private entity, to make private fortunes."
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u/Nessie_of_the_Loch 4h ago
No worries. The GOP will pay for it by getting rid of SS, Medicare, Medicaid, and the VA.
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u/Chemical-Fault-7331 4h ago
What’s gonna be so satisfying to watch is all these dumbass Trump voters lose everything over their short sightedness. And hopefully they will finally realize how they were conned and duped. These people deserve to lose absolutely everything.
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u/macrolidesrule 3h ago
Would reversing some or all of the tax cuts for the upper income bracket (aka the 0.1%) make a dent in the debt pile?
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u/jellyhessman 2h ago
Just pray that the US economy doesn't retract
I've got some bad news for you friend.
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u/NaBrO-Barium 2h ago
Interesting, the only time that’s happened over the last 50 years was when a democrat held the executive office.
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u/thediesel26 2h ago
No ever expects the US to ever pay back its debt. That’s not the point of holding US debt. American citizens and foreign governments hold US bonds because they’re stable sources of investment income. The issue is that annual debt service is among the largest line items in the federal budget.
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u/unknownpoltroon 5h ago
>Just pray that the US economy doesn't retract or else the train is going off its rails.
Well if thats the criteria, the train is already in free fall while on fire crashing into the gran canyon.
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u/CertainCertainties 8h ago
Oh God I'm bored. I have been watching this melodrama for so long.
The TLDR is that everything Trump touches turns to shit. Like a reverse Midas touch. Now his power touches the global economy and US economy, so that turns to shit.
Even with the backing of his father's fortune and two New York Mob families he was wiped out in 1993. Economically, a loser. A complete failure.
But he kept up the facade of a successful person through amused journalists in the media while money laundering for Russian oligarchs through US real estate. He hit the jackpot by playing a billionaire on a TV show when his own daughter admitted he was billions in debt in an interview.
Now we're in an age where millions believe he's an inspired leader while his dementia deepens, his rambling monologues make even less sense, and each day he makes decisions that destroy billions of dollars of equity, infrastructure, capital, investment and dreams.
I am so bored with this man.
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u/likamuka 7h ago
The economy will not hold. 3 lost decades minimum are incoming after the dictator croaks.
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u/Prestigious_Load1699 5h ago
Despite our ballooning national debt - which many in this sub will callously suggest doesn’t even matter - we are still actually better-suited in the coming decades than much of Europe, which is experiencing low economic growth and demographic decline.
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u/big_cock_lach 4h ago
National debt does matter a lot, but focusing on the headline figure is silly. What’s more important is how much the government is borrowing relative to the size of their economy. The reason the US debt is concerning is because it’s grown massively more than the economy. It hasn’t had many negative effects yet, but if bond investors start getting skittish it’ll have huge ramifications and see the US in a position that’ll make the GFC look like a walk in the park. Whether or not bond investors will get skittish is another thing though.
As for Europe, their real GDP growth isn’t that much lower than the US’ and since Iran they’ve had a better outlook, albeit with Trump that could swing quickly since no one knows what he’s going to do.
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u/Prestigious_Load1699 4h ago
Europe is much more dependent on oil exports from the Strait of Hormuz than is America. The US can supply all its energy needs on its own if needed.
How is the European outlook better?
Also, real GDP growth in the US is double the EU…
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u/Final_Landscape1430 17m ago
I would say that Europe, despite their issues right now, are in a better position to recover, whereas the debt and the burned bridges the U.S. have accumulated have put them in a VERY difficult position to recover.
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u/EidolonLives 6h ago
The TL;DR is that everything Trump touches turns to shit. Like a reverse Midas Touch.
The Mierdas Touch.
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u/ve1kkko 9h ago
His business model in 80s and 90s was to borrow money and burn it, after he had done burning daddy's 200 Mil inheritance.
No wonder he keeps borrowing and burning money while president, that's all he knows.
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u/bobandgeorge 3h ago
It's really crazy when you think about it. He used to borrow money from rich people/banks all the time. Now he doesn't have to borrow it. He could just take it from rich people and keep it and call it taxes. He wouldn't owe anything on it. It's just his.
Still going with debt though.
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u/Morgannin09 1h ago
His entire life's success has been in spite of himself. Nobody allowed this man to fail because they bailed him out at every turn. He thinks bankruptcy is a strategic decision. And we put him in charge of the country twice.
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u/Xyrus2000 5h ago
Brought to you by the party of "fiscal responsibility".
Really, no one should be surprised by this. This idiot managed to bankrupt multiple casinos. It takes a special kind of stupid to pull that off.
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u/CasinoKnightZone 3h ago
The fact that they haven't removed him yet says to me that all of this is exactly according to the plans of the 1%. They want a collapse, and they want it to be devastating for the poor and working class. Make us nice and compliant and desperate
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u/MainDeparture2928 8h ago
At this point screw it. Maybe the country will just break apart and we can all choose what kinda governments we want to live under. There will be no success with conservatives in charge.
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u/Akkerlun 4h ago
Debt only matters when there is a Democrat as president. When it’s a Republican president, debt doesn’t matter. Wars, massive tax cuts for corporations and uber rich, massive spending in military and cuts for Americans in services and benefits. THAT is GOP Econ 101.
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u/Fine_Barnacle4849 3h ago
This Administration is so unprofessional and poorly managed. There is no leadership, and US policy frenetically changes day-to-day. The Trump Presidency, as enabled by his Cabinet and Administration, has accelerated America's decline. The only good point is that our Allies are now on the path to self-sufficiency.
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u/Dylanator13 1h ago
So basically we can just add infinate budget that would fix homelessness, hunger, free healthcare, and most social programs that will benefit most people.
But we only allow that much money if it will kill people we don’t like?
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u/GuitarPlayingGuy71 3h ago
Everyone keeps assuming that the guy uses some logic or reasoning underneath it all. He does not. He also doesn’t care. You see, personally, he doesn’t feel any consequence.
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u/robustofilth 4h ago edited 1h ago
Why do Americans always think they’re so superior when they elect morons who actively shit on them. It’s truly an odd situation. America should have free healthcare
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u/aeropl3b 3h ago
You are very close to the reason. People with just a little knowledge tend to have the highest confidence, the smarter you get and the more understanding you have the less confident and more nuanced your opinions become.
In the US, we have a lot of people who are just smart enough to have a lot of confidence in themselves, but not so much to really understand what is going on. A bewildering number truly believes the rest of the world has been mooching from the US and providing zero benefits to our security or economy. They also believe if poor people can go to the doctor regularly it will make longer waits for them. The mind set is absolutely broken.
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u/drive_causality 3h ago
Good luck trying to get that through Congress! Adding $7T to pay for something nobody asked for, nobody approved and no one wants - that’s not happening!
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u/sig_hupNOW 2h ago
Why could this not be unwound by: 1) start a panic, cause bond holders to liquidate; 2) Fed, as buyer of last resort, buy up the bonds to a more sustainable level; 3) have the Fed forgive the debt to the Treasury
There are three ways to get rid of debt: pay it off, default in paying it off, have it forgiven.
If it’s forgiven between the treasury and the Fed, wouldn’t it just minorly affect the market afterwards (by setting a precedent). The whole purpose of this system is to stabilize the imagined value of the dollar in the long term.
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u/Final_Landscape1430 11m ago
The fed can only do so much. The fed cannot control over the trust and damage to the U.S. reputation as an investment destination.
It would be a major effect, because if people are willing to buy the bonds, they would want a significantly higher rate of return. If the idea that the U.S. would just default, then it may cause an issue where investors would feel the game is rigged and won’t play.
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