America's capital crunch: Soaring debt collides with AI spending spree

America is caught in a historic capital squeeze: On one side: Trillions Washington must borrow to pay for the past .

On the other: Trillions the economy needs to build the future .

Why it matters: The next president will inherit a fiscal reckoning decades in the making.

The price it exacts — on taxes, benefits, borrowing and investment — could shape America's prosperity and power for generations.

Zoom in: President Trump said in 2016 that he could eliminate what was then roughly $19 trillion in national debt within eight years.

On Tuesday, the debt crossed $40 trillion, after growing by $3 trillion in the past year alone.

About $32 trillion is owed to investors and other outside holders.

The rest is debt the government owes to its own accounts, including Social Security and other federal trust funds.

Treasury must refinance $9.7 trillion in debt coming due this fiscal year while covering a deficit the Congressional Budget Office now projects at roughly $2.1 trillion.

That creates a punishing cycle: Old debt comes due, Washington replaces it with more expensive debt, and the resulting interest bill feeds future deficits.

CBO projects annual deficits will average $2.4 trillion through 2036, pushing debt held by the public to 120% of GDP — above the record set after World War II.

The U.S. has already spent $963 billion on interest in the first 10 months of this fiscal year, $200 billion more than it spent on the military over the same period.

Data: CBO; Chart: Sara Wise/Axios Zoom out: For years, Silicon Valley's AI buildout was financed almost entirely with cash.

Now Big Tech is becoming one of the biggest new forces in global debt markets.