US debt surpasses 100% of GDP as Big Tech's $690 billion investment in AI competes for the same capital resources.

      **TL;DR**

      US public debt has surpassed 100% of GDP for the first time since World War II, reaching 100.2% at the end of March. Annual interest payments of $1 trillion now exceed defense spending. This milestone coincides with Big Tech committing $660 to $690 billion in AI capital expenditures for 2026, funded through the same debt markets that are absorbing trillions in new Treasury issuances. This raises concerns about how long global capital markets can support both government deficits and the technology sector's infrastructure expansion.

      The US government's debt has outstripped its production capacity. Data from the Bureau of Economic Analysis showed public debt at $31.27 trillion at the end of March, compared to a nominal GDP of $31.22 trillion over the past year, pushing the ratio to 100.2%. This is the first time it has exceeded 100% since the post-World War II era, previously peaking at 106% in 1946. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, remarked that the 1946 debt stemmed from a global conflict, while the current debt reflects a "total bipartisan abdication of making hard choices." The total gross national debt, including intra-governmental obligations, has surpassed $39 trillion, amounting to about $114,000 per American or $289,000 per household. However, the more pressing figure is the monthly interest payments, with the federal government expected to spend approximately $1 trillion on net interest in fiscal 2026—now exceeding the total defense budget.

      **The Arithmetic**

      The Congressional Budget Office (CBO) indicated in February that, on current trajectories, public debt could reach 108% of GDP by 2030 and 120% by 2036. The fiscal deficit for 2026 is projected at $1.9 trillion, or 5.8% of GDP, likely growing to $3.1 trillion by 2036. The government currently expends $1.33 for every dollar of revenue. Net interest payments were $375 billion in fiscal 2019 but skyrocketed to $971 billion by fiscal 2025, with projections estimating $2.1 trillion annually by 2036. Interest payments have already surpassed national defense and Medicare, making them the second-largest expense in the federal budget, following Social Security. The CBO's projections serve as a baseline, reflecting what will happen if current laws remain unchanged.

      The One Big Beautiful Bill Act, passed by the House in April, is expected to worsen things before any solutions can improve the situation. The CBO estimates it will ultimately add about $2.4 trillion to the deficit over the next decade before interest costs and approximately $3 trillion including them. The legislation extends the 2017 tax cuts, introduces new deductions, and cuts spending on Medicaid and other programs. While tariff revenues from administration trade policies may offset around $3 trillion in lost tax revenue in the same timeframe, the CBO anticipates that these tariffs will escalate inflation from 2026 to 2029, thereby increasing government borrowing costs. If temporary provisions of the bill become permanent and several tariffs are struck down, the CRFB estimates debt could reach 131% of GDP by 2034. Proponents of the bill argue it will foster economic growth that self-finances; however, the CBO disagrees.

      **The Collision**

      The 100% threshold has been reached as the private sector embarks on an extensive and capital-intensive infrastructure buildout unprecedented since electrification. The five largest American cloud and AI companies—Microsoft, Alphabet, Amazon, Meta, and Oracle—are collectively planning to invest between $660 billion and $690 billion in capital expenditures in 2026, mostly directed towards data centers, GPUs, and AI networking. This spending is not entirely financed through cash flow; for instance, Oracle borrowed $16.3 billion for a data center in Michigan after US banks withdrew, requiring PIMCO to support $10 billion of the debt. Meta has allocated $35 billion to CoreWeave, an AI cloud provider with roughly $30 billion in total debt, much of which is at junk bond rates. CoreWeave accessed the US high-yield market twice in one week in April, raising $1 billion in additional notes at 9.75%. The financing for this AI infrastructure is sourced from the same debt markets that are also accommodating trillions in new Treasury issuances, creating real competition for capital. In April, the International Monetary Fund warned that the surge in Treasury supply is compressing the “convenience yield” of US government bonds, traditionally seen as safe and liquid, which has now turned negative for the first time.

      The implications for the technology sector are significant. AI infrastructure necessitates long-term financing; data centers take years to build and decades to amortize. Contracts that validate their construction, like Meta's long-term