The One Big Beautiful Bill recently got signed into law, reducing taxes for many Americans.
But what will the hefty cuts mean for the U.S. national debt?
Here’s how economic experts say the costs of the OBBB could trickle down and impact American households.
How Much Will the OBBB Act Cost?
The Congressional Budget Office estimates that the OBBB Act will increase the national debt by $3.4 trillion over the next 10 years. That includes $4.5 trillion in decreased revenues plus over $700 billion in additional interest payments.
At the time of this writing, the national debt is $36.9 trillion, meaning the $4.1 trillion OBBB costs are equivalent to about 11% of our country’s current debt. To account for the increase, the OBBB increased the statutory debt limit by $5 trillion.
“The OBBB is expected to provide a short-term boost to economic growth and create a positive environment for M&A and IPO activity, which has struggled this year from a heightened period of uncertainty brought on by volatile tariff and trade policies,” Carla Nunes, managing director at Kroll, said in an email.
“It places less immediate pressure on the U.S. Treasury market but does not erase the upward pressure on long-term interest rates from the significant government debt load,” she added.
[What Trump’s Big Beautiful Bill Could Mean for Families’ Budgets]
What Is the National Debt?
The federal government has a budget to balance, just like any other organization or person. It generates revenue and has expenses. When revenues fall short, the U.S. government often borrows money to cover the difference. The amount it borrows is then added to the national debt.
What’s unique about the federal government’s financial situation is that it has access to a source of credit that continues to expand. While there is a debt ceiling designed to limit the amount of credit available, the U.S. government continuously suspends or increases the limit when it can’t afford its obligations or initiatives.
Congress has never declined a request to raise the debt limit, resulting in 78 debt ceiling increases since 1960.
[Read: Why Trump’s Idea to Eliminate Capital Gains Tax on Home Sales Probably Won’t Benefit You]
Concerning National Debt Trends
The national debt is growing faster than the economy, which is not sustainable long term, according to the U.S. Government Accountability Office.
While the U.S. has carried debt since its inception, the pace of accumulation is accelerating.
| Year | National Debt Balance |
| 1960 | $286 billion |
| 1970 | $370 billion |
| 1980 | $907 billion |
| 1990 | $3.2 trillion |
| 2000 | $5.6 trillion |
| 2010 | $13.5 trillion |
| 2020 | $26.9 trillion |
| 2025 | $36.9 trillion |
In the past, the national debt balance would spike during crises or recessions and decline during periods of growth. But today, it continues to rise regardless of the economy’s performance. Case in point, despite strong economic growth in 2024, the annual deficit was still more than $1.8 trillion. Last year was also the fifth consecutive year the deficit exceeded $1 trillion.
Credit rating agencies are taking notice of this trend. The U.S. has now been downgraded by three major agencies — S&P, Moody’s and Fitch — due to concerns about its inability to rein in large and growing deficits.
But what’s behind the acceleration of debt? The causes are layered. Along with continued non-mandatory federal spending, there are rising Social Security and Medicare costs, frequent crises and compounding interest costs. Interest spending now exceeds some of the largest categories of federal spending and is on track to exceed spending on Social Security (the largest federal program) by 2044.
[Will Trump’s Policies Spark a Recession?]
How Can the Rising National Debt Affect You?
The snowballing national debt is a problem for more than just the federal government, it trickles down to impact everyday Americans. In one way or another, citizens tend to foot the bill. “Higher debt needs to be paid somehow — either through higher taxes or higher inflation,” Michael Klein, professor of international economic affairs at The Fletcher School, said in an email.
More debt also affects interest rates.
Downgraded credit ratings signal risk to investors, which can lead to increased borrowing costs and downward pressure on the U.S. dollar. As a result, the U.S. may experience higher interest and inflation rates, potentially restricting consumer and government discretionary spending.
“If interest rates rise, the dollar amount that must be spent on interest will squeeze out other discretionary spending in the (federal) budget. This will impact the Americans and the services they expect to see from the federal government,” says Mac Clouse, finance professor at the University of Denver.
Clouse says now is a time for Americans to become more fiscally conscious, adding, “Know what your own budget looks like and know where you may have to cut back and manage your spending, especially if there are cutbacks in what the federal government can do for its citizens.”
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Trump’s One Big Beautiful Bill Just Raised the Debt Ceiling by $5 Trillion: Here’s Why That Matters to You originally appeared on usnews.com
