Federal deficit at 6% of GDP, debt above WWII peak
Eduardo Porter, writing in The Guardian on Wednesday, reported that the United States’ gross federal debt has reached approximately $40 trillion, up from roughly $35 trillion when President Donald Trump took office less than two years ago. Porter, an economics and politics columnist who writes the newsletter “Being There” on Substack, attributed the debt’s growth to a fiscal strategy stretching back nearly half a century.
In an analysis published August 20, Porter traced the pattern to President Ronald Reagan’s first address to the nation on February 5, 1981. Reagan described the United States as being “in the worst economic mess since the Great Depression” and proposed tax cuts as a remedy for what he called government “extravagance.” At the time, the federal deficit stood at 2.6% of GDP and total federal debt was approximately $1 trillion, about one-third of GDP, Porter wrote.
Reagan argued that cutting revenue would compel restraint: “There were always those who told us that taxes couldn’t be cut until spending was reduced,” Reagan said in the speech. “Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.” The strategy Porter described became known as “starve the beast.”
Porter wrote that every Republican administration since Reagan’s has cut taxes while borrowing to maintain spending levels, leaving Democratic successors to address the resulting deficits. He cited Bruce Bartlett, a former Republican policy adviser who worked on an early version of Reagan’s 1981 tax plan, as saying: “It’s all part of Republican plan going on for quite a long time to tie the hands of Democratic presidents.”
The federal deficit is currently running at about 6% of GDP, with total federal debt at approximately 123% of GDP — a level higher than the United States’ World War II peak, Porter wrote. Interest payments on the debt cost about 3.2% of GDP, or roughly $1 trillion annually, exceeding what the government spends on national defense or Medicare, according to Porter.
Trump’s signature One Big Beautiful Bill Act (OBBBA), passed this year, extended the pattern, Porter wrote. The legislation included more than $5 trillion in tax cuts concentrated among high-income Americans, paired with more than $1 trillion in cuts to Medicaid and food assistance programs. Bartlett described the measure as designed to “make sure the next Democratic president is a complete and total failure.”
Porter cited the Clinton administration as an illustration of how the pattern constrains Democratic successors. President Bill Clinton inherited a deficit equal to 4.5% of GDP from George H.W. Bush and raised federal revenues from 17% to 20% of GDP over his two terms, leaving a budget surplus of 2.3% of GDP, Porter wrote. Clinton’s successor, George W. Bush, then “happily spent the inheritance on huge tax cuts that largely benefited the rich,” Porter wrote.
Financial markets are responding to the rising debt burden, with bond yields climbing, Porter wrote. Rising yields alone will increase the government’s cost of servicing the debt, “crowding out Democratic spending priorities” should the party retake the White House in 2028, Porter wrote. Ambitious Democratic policy proposals — including Medicare for All or expanded family allowances — would face constraints from the deficits and debt Trump will leave behind, he wrote. Even reversing Trump’s cuts to Medicaid, food stamps, and Affordable Care Act subsidies “will seem forbidding,” Porter wrote.
Porter characterized Trump’s broader fiscal approach as “Keystone Cops-style governance,” citing tariffs struck down by the Supreme Court that required the government to return tens of billions of dollars to importers. He also wrote that Elon Musk’s Department of Government Efficiency “decimated federal programs and probably killed millions of children” while doing nothing to close the budget deficit — a characterization attributed to Porter’s analysis.