TL;DR
US debt held by the public has crossed 100 per cent of GDP for the first time since World War II, reaching 100.2 per cent at the end of March. The $1 trillion annual interest bill now exceeds defence spending. The milestone arrives as Big Tech commits $660 to $690 billion in AI capex for 2026, financed through the same debt markets absorbing trillions in new Treasury issuance, raising the question of how long global capital markets can sustain both the government’s deficits and the technology industry’s infrastructure buildout.
The United States government now owes more than the country produces. Data released by the Bureau of Economic Analysis on 30 April showed that debt held by the public stood at $31.27 trillion at the end of March, while nominal GDP over the preceding 12 months was $31.22 trillion, pushing the ratio to 100.2 per cent. It is the first time since the aftermath of World War II that the figure has exceeded 100 per cent. The wartime peak was 106 per cent, reached in 1946, the year the country demobilised 12 million soldiers and began building the interstate highway system. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, noted the difference in a statement that has since been quoted in every major American newspaper: the 1946 debt was “borne from a seismic global conflict,” she said, while today’s is the result of “a total bipartisan abdication of making hard choices.” Total gross national debt, including intragovernmental obligations, has already surpassed $39 trillion. That is roughly $114,000 per American, or $289,000 per household. The number that matters more, though, is the one that arrives every month in the form of interest payments: the federal government will spend approximately $1 trillion on net interest in fiscal 2026, a figure that now exceeds the entire defence budget.
The arithmetic
The Congressional Budget Office warned in February that, under current trajectories, debt held by the public will rise to 108 per cent of GDP by 2030, surpassing the postwar record, and balloon to 120 per cent by 2036. The deficit for fiscal 2026 is projected at $1.9 trillion, or 5.8 per cent of GDP, growing to $3.1 trillion by 2036. The government currently spends $1.33 for every dollar of revenue it collects. Net interest payments, which were $375 billion as recently as fiscal 2019, reached $971 billion in fiscal 2025, and the CBO projects they will hit $2.1 trillion annually by 2036. Interest has already overtaken national defence and Medicare as the second-largest line item in the federal budget, trailing only Social Security. The trajectory is not a projection of what might happen if things go wrong. It is the CBO’s baseline, the projection of what happens if current law remains unchanged and nothing else goes wrong at all.
The One Big Beautiful Bill Act, which the House passed in April, will make things worse before any plausible mechanism makes them better. The CBO estimates the legislation will add approximately $2.4 trillion to the deficit over the next decade before interest costs, and $3 trillion including them. The bill extends the 2017 tax cuts, introduces new deductions, and reduces spending on Medicaid and other programmes. Tariff revenue from the administration’s trade policies is expected to offset approximately $3 trillion in lost tax revenue over the same period, but the CBO projects that the tariffs will also raise inflation from 2026 through 2029, which increases the government’s borrowing costs on the debt that the tariffs were supposed to help pay for. In an alternative scenario where the bill’s temporary provisions are made permanent and the Supreme Court strikes down several of the administration’s tariffs, the CRFB estimates debt would reach 131 per cent of GDP by 2034. The bill’s supporters argue it will generate economic growth that pays for itself. The CBO does not agree.
The collision
The 100 per cent threshold arrived at a moment when the private sector is assembling the most capital-intensive infrastructure buildout since electrification. The five largest American cloud and AI companies, Microsoft, Alphabet, Amazon, Meta, and Oracle, have collectively committed to spending between $660 billion and $690 billion on capital expenditure in 2026, nearly all of it directed at data centres, GPUs, and networking for artificial intelligence. This spending is not being financed entirely from cash flow. Oracle borrowed $16.3 billion for a single data centre campus in Michigan after US banks retreated from the deal, requiring PIMCO, the world’s largest bond fund, to anchor $10 billion of the debt. Meta has committed $35 billion to CoreWeave, an AI cloud provider whose total debt load has reached approximately $30 billion, much of it at junk bond rates. CoreWeave tapped the US high-yield market twice in a single week in April, raising $1 billion in additional notes at 9.75 per cent. The AI buildout is being financed through the same debt markets that are simultaneously absorbing trillions in new Treasury issuance, and the competition for capital is not theoretical. The International Monetary Fund warned in April that the surge in Treasury supply is compressing the “convenience yield,” the safety and liquidity premium that US government bonds have historically commanded, and that this premium has recently turned negative for the first time.
The implications for the technology sector are direct. AI infrastructure requires long-duration financing: data centres take years to build and decades to depreciate, and the contracts that justify their construction, such as Meta’s multi-year commitments to CoreWeave, depend on the assumption that capital will remain available at manageable rates. When the government borrows more, it pushes yields higher across the entire fixed-income market. The 10-year Treasury yield sat at 4.31 per cent at the end of April, stable for now but elevated by historical standards, and the 30-year yield was 4.91 per cent. Every basis point increase in benchmark rates ripples through the corporate bond market, raising the cost of the junk debt that finances companies like CoreWeave and the investment-grade debt that funds the hyperscalers’ balance sheets. The AI industry’s collective assumption, that hundreds of billions of dollars in annual capex will eventually be justified by revenue, depends on a financing environment that the government’s fiscal trajectory is actively degrading.
The irony
There is an irony in the timing that is worth stating plainly. The technology industry’s largest companies are valued, in aggregate, at more than $15 trillion. Anthropic alone recently hit a $1 trillion implied valuation on secondary markets. The AI sector’s pitch to investors is that it is building the infrastructure of the future, a claim that depends on the continued stability of the American financial system, the dollar’s reserve currency status, and the willingness of global investors to keep buying US government debt at rates that do not destabilise the economy. The 100 per cent debt-to-GDP milestone does not, by itself, trigger a crisis. Japan has operated above 200 per cent for years without a sovereign debt event. But Japan issues debt in a currency its central bank controls and to a domestic investor base that holds the vast majority of its bonds. The United States issues debt to the world, and the world’s appetite is not infinite. The IMF’s warning about the eroding convenience yield is a signal that the market’s confidence in Treasuries as a risk-free asset is weakening at the margins, and margins are where crises begin.
The technology sector is not a passive observer of fiscal policy. European tech companies have warned that the administration’s tariffs will raise hardware costs and disrupt software supply chains. The tariffs are projected to generate $3 trillion in revenue over the next decade, but that revenue comes with higher input costs for the companies building the AI infrastructure the administration says it wants to encourage. The One Big Beautiful Bill Act includes provisions that benefit technology companies, including an extension of the $1 million expensing limit for capital equipment and new deductions for tip income and auto loan interest that are designed to stimulate consumer spending. But the bill’s net effect on the deficit, an additional $2.4 trillion to $3 trillion over 10 years, increases the government’s borrowing needs at the exact moment the private sector is also borrowing at unprecedented scale. The government and the AI industry are both making enormous bets on the future. They are both financing those bets with debt. And they are both drawing from the same pool of capital.
The question
The debate over the national debt has traditionally been conducted in the language of generational responsibility: the bills we are leaving our children, the obligations we are deferring. That framing obscures the more immediate problem. The $1 trillion annual interest bill is not a future cost. It is a present one, larger than the defence budget, larger than Medicare, and growing faster than either. Every dollar spent on interest is a dollar that cannot be spent on research, infrastructure, education, or any of the public investments that the technology industry’s own growth depends on. Private capital is flowing into AI at a velocity that has no peacetime precedent, but private capital operates within a public framework of stable currencies, enforceable contracts, and functioning debt markets. The 100 per cent threshold is a symbol, not a trigger. What it symbolises is that the United States is running a peacetime deficit of a scale previously associated with global wars, while simultaneously hosting the largest private infrastructure buildout in its history, and financing both with debt. The question is not whether the numbers are sustainable. The CBO has already answered that: they are not. The question is how long the world’s investors will continue to finance both the government’s deficits and the technology industry’s ambitions before one of them is told to wait.
