Trump's Military Spending Plan Could Add $6.9 Trillion to US Debt, CRFB Warns

Former President Donald Trump's budget proposal for fiscal year 2027 has raised serious concerns about America's fiscal sustainability. According to calculations by the nonpartisan Committee for a Responsible Federal Budget (CRFB), the planned increase in military spending could add approximately $6.9 trillion to the national debt over the next decade.

The Numbers That Worry Economists

The CRFB estimates that the defense budget increase would raise discretionary spending by $5.8 trillion between 2027 and 2036. When incorporating associated financial costs, primarily interest payments, the total impact on debt would reach $6.9 trillion. This figure represents an upward revision from previous calculations, driven by an additional year in the budget window and higher interest rates than in prior assessments.

The White House is scheduled to release its full budget request today, with its centerpiece being a "historic" increase in defense spending to $1.5 trillion for 2027. According to the CRFB, this would be by far the largest year-over-year increase in military spending in the post-World War II era.

Powell's Warning on Debt Trajectory

Meanwhile, Federal Reserve Chair Jerome Powell has issued a stark warning about the country's fiscal path. In a conversation with Harvard students this week, Powell stated that while the current $39 trillion debt level isn't unsustainable, its growth rate certainly is.

"The level of the debt is not unsustainable," Powell said. "But the trajectory is unsustainable. It won't end well if we don't do something fairly soon." This distinction between the current stock and the growth rate lies at the heart of America's fiscal challenge.

The Real Cost of Borrowing

What most concerns economists and monetary authorities isn't just the nominal size of the debt, but its growth velocity compared to the economy and the cost of financing it in a high-rate environment. Currently, net interest payments on the national debt are projected to exceed $1 trillion in fiscal year 2026.

This figure nearly triples the $345 billion the government paid in 2020, reflecting how rising interest rates have multiplied debt servicing costs. In just the first three months of the current fiscal year, interest payments reached $270 billion—a growing burden that directly competes with other budget priorities.

Market Context and Crypto

Amid these fiscal concerns, financial markets show relative stability. Bitcoin trades around $66,582 with minimal movement in the past 24 hours, while Ethereum holds at $2,054. This relative calm in crypto markets contrasts with warnings about U.S. debt, suggesting investors haven't fully priced in long-term fiscal risks.

The CRFB has noted that a budget request of this magnitude should be fully offset by other proposals within the budget. The organization called on legislators to cut other spending, increase revenue, or apply a combination of both measures if they wish to accommodate the president's request.

Implications for Investors

The growing U.S. debt burden has direct implications for investors across all asset classes. Historically, persistent fiscal deficits have led to inflationary pressures and currency devaluation—factors that have traditionally benefited safe-haven assets like gold and, more recently, Bitcoin.

With interest payments already exceeding $1 trillion annually and projected to grow, the federal government faces difficult choices about spending cuts or tax increases. Any path chosen will have consequences for economic growth and financial market stability.

“Markets are always looking at the future, not the present.”

— Diario Bitcoin

Trump's proposal comes at a particularly delicate moment, as the national debt has just surpassed $39 trillion and interest rates remain elevated. America's ability to finance its debt without harming economic growth or geopolitical standing will be one of the most important economic questions of the coming decade.