US federal debt reached $40 trillion, up from about $35 trillion in 2021, as Republicans advance large tax cuts that could increase deficits.

The debt growth follows a long‑standing Republican strategy called “starve the beast,” which seeks to reduce government revenue through tax cuts rather than cut spending. The approach began under President Ronald Reagan in 1981 and has continued across subsequent administrations.

The 2026 budget deficit is projected at roughly 6 % of GDP, and debt as a share of GDP sits above 120 %. Interest payments on the debt amounted to about 3.2 % of GDP, or roughly $1 trillion, surpassing spending on national defense and Medicare.

The latest legislation, the One Big Beautiful Bill Act, includes $5 trillion in tax cuts, primarily benefiting high‑income earners, while cutting more than $1 trillion from Medicaid, food assistance and other social programs.

Past Republican tax reductions, such as those under Reagan and Bush, have not generated enough growth to offset revenue losses, leading to wider deficits that Democratic administrations have had to address. Clinton’s 1990s surplus resulted from tax increases and spending restraint, while Bush’s later cuts reversed that progress.

Democrats face a constrained fiscal environment if they seek major initiatives like Medicare for All or expanded family benefits, given the existing debt burden and rising bond yields that could increase borrowing costs. Republicans are likely to reemphasize fiscal restraint rhetoric once Democrats assume power.