US Debt Crosses $40 Trillion Mark for the First Time

Total U.S. debt has exceeded $40 trillion for the first time, marking a new fiscal milestone as government borrowing and debt-service costs continue to rise.

Treasury data showed total public debt outstanding at $40.047 trillion on Tuesday. Of that, $32.266 trillion was held by the public, and $7.782 trillion represented intragovernmental holdings.

The debt burden has more than doubled from $19.95 trillion when Donald Trump first entered the White House in January 2017.

Double in a Decade

About one-third of the increase since 2017 came during two years of heavy borrowing linked to the COVID-19 pandemic under Trump and former president Joe Biden.

The remainder reflects fiscal decisions under both administrations, along with longer-term imbalances between federal spending and tax revenues.

The $40 trillion threshold was crossed less than five months after debt reached $39 trillion, according to the Committee for a Responsible Federal Budget. The total has quadrupled in less than 20 years.

Maya MacGuineas, the committee’s president, warned that the consequences extend beyond federal accounts.

“Forty trillion dollars of debt doesn’t exist solely on the government’s ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another,” she told Reuters.

“The more we borrow, the more we exacerbate inflation, squeeze out other priorities in the budget, and leave ourselves vulnerable to emergencies at home and turmoil abroad.”

Bond Market Pressure Builds

Signs of strain have also emerged in the Treasury market.

Demand from foreign investors, who hold nearly one-third of Treasuries, has declined over the past year. Meanwhile, long-term yields have climbed as investors demand greater compensation to absorb heavy government bond issuance.

A $25 billion auction of 30-year Treasury bonds recently cleared at the highest yield since 2021. On Tuesday, long-bond yields reached their highest levels in nearly two decades.

Treasury Secretary Scott Bessent on Wednesday announced that buyback sizes for 10- to 30-year Treasuries would double to at least $4 billion per operation.

Higher long-term Treasury yields can feed through into borrowing costs for mortgages, car loans and commercial credit.

Trump, who has repeatedly called for lower rates, dismissed concerns about bond-market volatility.

“I don't think so at all. I think we have a very powerful country, and we're powering through these ridiculous interest rates; they're ridiculous,” Trump said when asked whether Americans should be concerned.

Deficits Continue to Widen

The debt milestone comes as federal deficits remain elevated.

The Treasury reported a $432 billion deficit for July, the fourth-highest monthly shortfall in U.S. history. Tariff refunds pushed customs receipts into negative territory for a third consecutive month, while Social Security and Medicare spending continued to increase.

The deficit accumulated during the first 10 months of fiscal 2026 has already surpassed the entire fiscal 2025 gap, with two months still remaining.

Trump’s first term added $7.8 trillion to the public debt, with more than half of that increase occurring during the final nine months as the government financed its pandemic response.

Since he returned to office in January 2025, debt has risen by another $3.8 trillion. Across his two terms so far, the increase totals $11.6 trillion.

Debt rose by $8.4 trillion during Biden’s presidency, a period that included COVID-19 recovery measures as well as spending on infrastructure, clean-energy subsidies and other Democratic priorities.

The Committee for a Responsible Federal Budget estimates that policy decisions taken by both Trump and Biden pushed debt above the trajectory implied by existing spending laws when each entered office.

Interest Costs Move Up the Budget

Fiscal pressure is increasingly being driven by mandatory spending and interest payments.

The federal government spends about $7 trillion a year, with roughly 60 percent directed to mandatory programs including Social Security, Medicare, Medicaid and veterans’ care.

A further $1.1 trillion goes toward interest on federal borrowing. Those costs rise as both the debt stock and interest rates increase.

Debt-service costs exceeded Pentagon funding for the first time in fiscal 2025.

During the first 10 months of fiscal 2026, interest spending also surpassed Medicare outlays, making it the federal government’s second-largest budget item behind Social Security.

At the same time, Washington faces rising retirement and healthcare costs linked to the baby-boom generation, while payroll and income tax revenues remain insufficient to cover total federal spending.

The $40 trillion milestone sharpens a fiscal debate that has become harder to defer: reducing the debt trajectory would require higher revenues, lower spending, or a combination of both.