Every so often, it is worth stacking up all the IOUs in this country and looking at the pile. Not to scare anybody. Just to remind us that every dollar of it has a name on it: and the name is usually ours.
The United States has now crossed roughly $40 trillion in federal debt. That number is large enough to become background noise, so let’s bring it back down to the kitchen table.
Here is the pile as of this fall. These are rounded figures drawn from the Federal Reserve, Treasury, Congressional Budget Office, New York Fed, Social Security Trustees, and other sources noted below. Different agencies count debt differently, so the numbers do not always line up perfectly. That is normal. The direction, however, is not confusing.
The Big Board
| Category | Amount owed | What it costs to carry |
|---|---|---|
| Federal government | ~$40 trillion | $1.0–$1.25 trillion a year in interest |
| State and local governments | $6.1 trillion | About $18,400 per person |
| Businesses | $22.6 trillion | Corporate borrowing up 8.8% in Q1 |
| Households | $18.8 trillion | Credit cards at $1.26 trillion; average rate over 20% |
| Student loans | $1.66–$1.84 trillion | 10.3% of balances 90+ days late |
Add the non-financial layers tracked by the Fed: government, business, and household: and the total comes to approximately $81.9 trillion.
That works out to roughly $240,000 for every man, woman, and child, or about $620,000 per household.
Nobody signed one giant document agreeing to that amount. But everybody is connected to it through taxes, prices, wages, retirement accounts, interest rates, public services, and the cost of borrowing.
1. Federal Debt: Interest Is Now a Budget Category
The national debt is sitting around $40 trillion. The CBO projects a federal deficit of approximately $1.9 trillion this year. Washington expects to spend $7.4 trillion while collecting about $5.6 trillion.
The important word here is interest.
Interest hit roughly $970 billion last year, is running about 11% higher this year, and the CBO puts it at approximately $1.0 trillion in 2026. By 2036, the projected figure reaches $2.1 trillion.
That is not money buying bridges, border security, veterans’ care, scientific research, or anything else people argue about on television. It is money paying the holders of Treasury debt.
DoubleLine’s calculation puts net interest at 18.5% of federal revenue, a higher share than in 1991. In plain English, about 19 cents of every dollar sent to Washington now goes to bondholders before it buys a single thing.
Interest already costs roughly as much as the entire federal corporate income tax haul. In ten years, under current projections, it will consume about a quarter of federal revenue.
The $40 trillion milestone is symbolic; there is no automatic financial explosion when the odometer rolls over. But it is a useful warning light. The government is borrowing heavily while the cost of carrying the old borrowing is rising. That is how a manageable bill turns into a permanent budget category.
2. State and City Debt: Pensions Are the Iceberg
Federal debt gets all the headlines, but state and local debt is where many families encounter the bill directly.
The Reason Foundation reviewed approximately 20,000 government financial statements and found:
- States owe about $2.7 trillion
- Cities owe about $1.4 trillion
- School districts owe about $1.3 trillion
- Counties owe about $760 billion
California’s total is approximately $1 trillion. New York’s is roughly $800 billion, or nearly $40,000 per resident.
The catch is that only part of this debt is in the form of traditional bonds. A large portion consists of promises: pensions and retiree health-care benefits negotiated decades ago but never fully funded.
You can refinance a bond. You cannot refinance a promise without changing the promise.
New York City entered 2026 with a projected $12.5 billion gap across two years. Chicago closed a $1.1 billion deficit, relying heavily on one-time money.
That is the municipal version of paying the mortgage with the credit card. It may get you through the month, but it does not make the house cheaper.
3. Project Debt: The Toll Booth Is the Tax
This is the debt layer that rarely appears on a tax bill.
Toll roads, stadiums, airports, water systems, and convention centers are often financed through revenue bonds. About 58% of state and local debt issuance comes through these types of bonds. The repayment is tied to the revenue generated by the project.
In other words, you pay to use the thing, and part of what you pay services the debt used to build the thing.
Federal TIFIA loans have put about $50 billion behind $176 billion in projects, with repayment coming through dedicated user fees: mostly tolls. The federal government also gives up approximately 26 cents in tax revenue for every dollar of tax-exempt municipal bonds issued.
So when officials say “no taxpayer dollars,” that phrase requires a little inspection. Maybe there is no check labeled “taxpayer subsidy.” There may still be a toll, fee, tax preference, or utility charge attached to the project.
Stadiums are the purest example. Minnesota’s football stadium involved approximately $462 million in public principal, but the total cost is expected to reach $882 million by 2043. Roughly $420 million is interest, partly paid through a Minneapolis sales tax scheduled to run until 2046.
The Vikings got the building. You got the note.
4. Business Debt: Big Firms Borrow for AI, Small Firms Borrow to Survive
Non-financial businesses owe approximately $22.6 trillion:
- Corporations: $14.5 trillion
- Small and unincorporated businesses: $8.1 trillion
Corporate borrowing jumped 8.8% in the first quarter, much of it through bonds. Some of that money is funding the artificial-intelligence buildout: data centers, computing capacity, energy infrastructure, and equipment.
That may create valuable businesses. It may also create an enormous bill before anyone knows which projects will earn enough to pay it.
Meanwhile, the shadow banking system continues to grow. Private credit and leveraged loans are each around $1.4 trillion. About 70% of companies borrowing through private credit are small businesses.
That means many Main Street companies are borrowing from funds most customers have never heard of, at rates that are not always posted on a public exchange.
Large companies can often refinance. A small business with a handful of employees and a variable-rate loan has fewer options. When rates rise, the owner does not need a Wall Street analyst to explain the problem. The monthly payment does the explaining.
5. Personal Debt: Steady on the Surface, Strained Underneath
Households owe roughly $18.8 trillion. The total fell by $13 billion last quarter, the first breather in a while.
The breakdown:
- Mortgages: $13.1 trillion
- Auto loans: $1.71 trillion
- Credit cards: $1.26 trillion
- HELOCs: $459 billion and climbing
The Fed’s language is that delinquency rates have “held steady.” Fine. But look at where they have held: approximately 9% of credit-card balances and 8% of auto balances are past due. New auto and credit-card delinquencies remain elevated.
Real wages went negative in the second quarter for the first time since 2022. That matters because a household can survive high prices for a while if pay rises faster than those prices. Once pay falls behind, the household starts making choices: delay the repair, carry the card balance, refinance the car, or skip the savings contribution.
People are not necessarily borrowing more because they are confident. Some are borrowing because the old bills still have to be paid.
6. Student Debt: The Collectors Are Back
Student-loan totals range from $1.66 trillion in the New York Fed’s accounting to $1.84 trillion in the Federal Reserve’s Financial Stability Report.
Approximately 10.3% of balances are 90 or more days late, worse than before COVID. About 7.7 million borrowers were in default in January, and the Education Department expects another 4 million to enter default.
The new Repayment Assistance Plan launched July 1. Wage garnishment: up to 15% of a paycheck, without a court order: restarts this fall for borrowers who did not get into a repayment plan.
If someone in your household is in default, this is not the month to ignore the mail. Call the servicer, check the available plans, and get the paperwork moving before the garnishment letter arrives.
7. Operating Deficits: The Programs Are Also Running Red
Debt is the stock. Deficits are the flow. Both are moving in the wrong direction.
The federal deficit is projected at $1.9 trillion this year, or 5.8% of GDP, and is projected to reach 6.7% by 2036.
Social Security expects approximately $1.697 trillion in payments against $1.493 trillion in revenue this year: a $204 billion gap covered by drawing down the trust fund.
The retirement trust fund is projected to run dry in 2032, one year earlier than last year’s estimate. Without congressional action, benefits would be cut automatically by approximately 22%.
Medicare Hospital Insurance is projected to return to deficit in 2027 and exhaust its reserves in 2033.
These dates are not surprises. They are printed on the calendar. The problem is that politicians prefer discussing the weather in 2032 rather than the bill coming due in 2032.
8. What You Pay In: Taxes, Fees, Tolls, and Everything Else
Washington collects approximately $5.6 trillion. State and local taxes average $6,949 per person, or about 11.2% of income.
The range is wide:
- Alaska: 4.6%
- New York: 15.9%
- Kentucky: 9.6%
The Tax Foundation’s all-levels-of-government household figures look like this:
| Income group | Total tax bill per household |
|---|---|
| Bottom 20% | $5,524 |
| Second 20% | $11,386 |
| Middle 20% | $24,451 |
| Fourth 20% | $44,580 |
| Top 20% | $125,748 |
And that is just taxes.
It does not include the toll on the commute, the facility fee on the concert ticket, the stadium sales tax, the airport charge, or the water-rate increase that is really a bond payment wearing a utility-bill costume.
That is the fee economy. It collects from you one swipe at a time, often without appearing in the political definition of a tax.
What It Means at the Kitchen Table
There is no such thing as somebody else’s debt. Federal, state, stadium, corporate, and household debt eventually gets serviced by the same economy: and the same wallet.
Interest is the tax that never got a vote. A trillion dollars in federal interest, municipal borrowing costs, and credit-card rates above 20% all move money from borrowers to whoever owns the paper.
This is not a conspiracy. It is how debt works. But it is fair to ask whether the design is serving the people who are doing the paying.
When politicians promise “no new taxes,” check the toll rate, the utility bill, and the ticket surcharge. The project debt gets paid. It just gets paid where fewer people are looking.
For your own household, the message is simpler:
- If you have credit-card debt at 20%, that is the fire. Put it out first.
- If you have a student loan in default, get into a plan before collections restart.
- Be cautious about taking on new variable-rate debt.
- Treat every “small” fee as part of the real price.
- Watch 2032. Social Security’s projected shortfall is not a distant academic problem.
We cannot fix the federal ledger from Louisville. But we can stop pretending the pile belongs to somebody else: and make sure our own corner of it is the one shrinking.
Disclosure: This article is for general informational and educational purposes only. Regular Guy Economics is not a financial advisor, and this content is not investment advice. Consult a qualified professional before making financial decisions.
Be mindful, be watchful and good luck.
Sources
- CBO Budget and Economic Outlook 2026–2036
- CBO Budget and Economic Outlook
- Peterson Foundation interest tracker and federal debt analysis
- DoubleLine via Yahoo Finance, September 8, 2026
- Federal Reserve Z.1 Financial Accounts, Q1 2026
- Federal Reserve May 2026 Financial Stability Report
- CBO debt and budget projections
- Federal Reserve FEDS Note on private credit, August 2026
- New York Fed Household Debt & Credit Report, Q2 2026
- Reason Foundation State and Local Government Finance Report
- Lord Abbett municipal outlook, including New York City and Chicago
- 2026 Social Security & Medicare Trustees Reports
- CRS R47573, TIFIA and municipal bond tax expenditure
- Minnesota Senate stadium finance summary
- Tax Foundation, Facts & Figures 2026 and “Who Pays Taxes”
- The College Investor and U.S. Department of Education materials on student-loan collections
- Regular Guy Economics podcast