The US national debt has crossed $40 trillion, the Treasury Department confirmed this week. Treasury data covering August 18 put the total at $40.05 trillion. Of that, $32.27 trillion is held by the public and $7.78 trillion is owed between government accounts.
The milestone arrived nearly two fiscal years ahead of schedule. The Congressional Budget Office had projected in 2023 that the debt would not reach $40 trillion until 2028.
Debt Doubled In Under A Decade
The debt has doubled in less than ten years. It stood at $20 trillion in late 2017 and crossed $30 trillion about four and a half years ago. More recently, the pace has quickened. The debt hit $38 trillion in October last year and $39 trillion in March this year.
The federal government borrowed $1.8 trillion in the first ten months of this fiscal year. That already exceeds total borrowing for the entire previous fiscal year. July alone brought a monthly deficit of $432.3 billion, the highest since March 2021.
Why The US National Debt Tops $40 Trillion Now
Spending on Social Security, Medicare, defense, and interest payments continues to outpace tax revenue. Interest costs have become one of the fastest-growing parts of the federal budget, as the government refinances older debt at today’s higher rates.
The Congressional Budget Office estimates that the tax and spending bill passed last year, known as the One Big Beautiful Bill, will add $4.2 trillion to the debt through 2034. Since the start of President Trump’s second term, the national debt has grown by $3.83 trillion. That combination is why the US national debt tops $40 trillion two years earlier than budget forecasters expected.
How Treasury Is Responding To The $40 Trillion Debt
Bond market pressure has pushed Treasury to act. Starting September 9, the department will at least double the size of its buyback operations in the 10-to-20-year and 20-to-30-year bond markets, from $2 billion to $4 billion per operation. The move runs through the next quarterly refunding announcement on November 4.
Buybacks let Treasury repurchase older, harder-to-trade bonds using cash it already holds. This improves market liquidity without adding to the total debt.
What Experts Say About The US National Debt Milestone
Reaction to the US national debt topping $40 trillion came quickly from fiscal watchdogs. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called on lawmakers to act before the next milestone hits. Margaret Spellings of the Bipartisan Policy Center said the country needs to change its current fiscal course, describing the situation as one that even the best-case projections cannot sustain long term.
The White House pointed to spending cuts and economic growth efforts as its response and placed blame on the prior administration for the scale of the debt.
What The $40 Trillion Debt Means For Borrowing Costs
As Treasury issues more debt to cover the gap, it often has to offer higher yields to attract buyers. Those higher yields tend to push up rates on mortgages, auto loans, and credit cards across the economy. A bigger interest bill also leaves less room in the federal budget for other programs, a squeeze some economists describe as debt service crowding out core spending.
FAQs
What does it mean that the US national debt topped $40 trillion?
It means the total amount the federal government owes, to the public and to itself, has passed $40 trillion for the first time.
Why is the national debt rising so fast?
Spending on Social Security, Medicare, defense, and interest payments has outpaced tax revenue for years, and rising interest costs on existing debt have widened the gap further.
How much has the US borrowed this year?
The government borrowed $1.8 trillion in the first ten months of the current fiscal year, more than it borrowed in the entire previous fiscal year.
How does the national debt affect mortgage and loan rates?
Higher federal borrowing often pushes bond yields up, and rising yields tend to filter through to mortgage rates, car loan rates, and credit card rates.
What is Treasury doing about the debt milestone?
Treasury is doubling the size of its bond buyback operations in the 10-to-20-year and 20-to-30-year markets starting September 9, to improve bond market liquidity.
When did the US debt cross earlier milestones?
The debt passed $20 trillion in late 2017, $30 trillion about four and a half years ago, $38 trillion in October last year, and $39 trillion in March this year.
