U.S. National Debt Surpasses $40 Trillion for the First Time

WASHINGTON — The total debt of the U.S. government has surpassed $40 trillion for the first time, according to Treasury Department figures, a milestone that underscores the rapid growth of federal borrowing over the past decade.

The debt stood at $40.05 trillion as of Aug. 18, the Treasury data showed. The figure includes all outstanding Treasury bills, notes and bonds. In 2016, the national debt was just under $20 trillion, meaning it has more than doubled in about 10 years.

Faster Than Projected

The Congressional Budget Office had projected that total borrowing would reach $39.6 trillion by the end of fiscal year 2026, which concludes Sept. 30, meaning the threshold was crossed earlier than expected. The CBO has said the country is approaching its statutory debt limit of $41.1 trillion and projects that debt will climb to about $64 trillion by 2036.

The increase reflects years of heavy spending under both the Trump and Biden administrations, along with rising interest costs on existing debt, according to the BBC.

Borrowing Costs Climb

The milestone arrives as the cost of government borrowing rises. The yield on the 30-year Treasury bond hit 5.34% on Tuesday, the highest level in almost 20 years. Treasury yields influence borrowing costs throughout the economy, including rates on mortgages, auto loans and credit cards.

The recent run-up in yields has been driven largely by rising oil prices linked to the war with Iran, which have stoked investor concerns about inflation. Analysts have also pointed to unease over the scale of government borrowing and the vast sums technology companies are raising to finance artificial intelligence infrastructure.

The Treasury Department said Wednesday it would increase its debt buyback operations by “at least double,” a step that can help support liquidity in the market for older Treasury securities.

Long-Term Risks

Most households are unlikely to feel immediate effects from the milestone. But some economists warn that persistent deficits leave the government more vulnerable to market disruptions. David Jacks, an economics professor at the National University of Singapore, told the BBC that the pace of debt accumulation is accelerating “and at some point, the bills will come due,” warning that difficulties managing the debt could eventually cause disruptions on a scale comparable to the 2008 financial crisis.

Interest payments have become one of the fastest-growing items in the federal budget, now rivaling or exceeding spending on major programs such as defense. As older, lower-yielding debt matures, the Treasury must refinance it at today’s higher rates, adding to annual costs.

The approaching debt ceiling is expected to set up another fiscal confrontation in Congress, where lawmakers will need to raise or suspend the limit to avoid a default on U.S. obligations.