US government debt has breached the US$40 trillion mark for the first time, intensifying concerns over the country’s worsening fiscal position as rising spending on social programmes and debt servicing continues to outpace revenues constrained by tax cuts.
The Treasury Department’s latest daily cash and debt balances showed total public debt outstanding at US$40.047 trillion on Tuesday, comprising US$32.266 trillion in Treasury securities held by the public and US$7.782 trillion in intra-governmental debt holdings.
The debt has more than doubled since Donald Trump first entered the White House in January 2017, when it stood at US$19.95 trillion. About one-third of the increase accumulated during the extraordinary borrowing required to finance the Covid-19 pandemic response under Trump and Biden, while the remainder reflects policy choices by both administrations alongside longstanding structural imbalances between government spending and tax revenues.
Fiscal watchdogs have warned that the trajectory could eventually trigger a full-blown debt crisis unless Washington takes politically difficult steps to raise revenues, curb spending or pursue a combination of both.
"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," Reuters cited Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget saying.
"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," MacGuineas said in a statement after the Treasury data was released.
She noted that the US$40 trillion threshold had been reached less than five months after debt crossed US$39 trillion and that the total had quadrupled in less than two decades, after the US took until 1981 to accumulate its first US$1 trillion in debt.
"It is staggering how predictable the fiscal decline of a global power can become," MacGuineas added.
The growing debt burden is also unsettling the Treasury market, with foreign investors, who hold nearly one-third of US Treasuries, showing declining demand over the past year.
A US$25 billion auction of 30-year Treasury bonds last week produced the highest yield since 2021, while yields on longer-dated government debt rose on Tuesday to their highest levels in nearly two decades as investors demanded greater compensation amid heavy Treasury issuance.
Higher long-term Treasury yields can feed through into borrowing costs for households and businesses, including mortgages, car loans and commercial financing.
Treasury Secretary Scott Bessent moved on Wednesday to support the long end of the market by announcing that the department would double the size of some debt buyback operations involving 10- to 30-year Treasuries to at least US$4 billion per operation.
Trump, meanwhile, dismissed concerns over bond-market volatility and again called for lower interest rates.
Asked at the White House whether Americans should be concerned about volatility in the bond market, Trump said: "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. Look, when our country is strong, interest rates should go down."
The latest figures underscore the scale of borrowing accumulated under successive administrations.
Public debt increased by US$7.8 trillion during Trump’s first term, with more than half of that increase coming during the final nine months of his presidency as the federal government financed its pandemic response.
Since Trump returned to office in January 2025, the debt has risen by another US$3.8 trillion, bringing the increase across his two terms so far to US$11.6 trillion.
Under Biden, public debt increased by US$8.4 trillion over four years, reflecting continued pandemic recovery spending as well as major investments in infrastructure, clean energy and other Democratic policy priorities.
The Committee for a Responsible Federal Budget has estimated that policy decisions under both presidents have pushed the federal debt trajectory above what would otherwise have accumulated under spending laws already in place when they took office.
Trump’s signature second-term legislative package, the One Big Beautiful Bill Act, is expected to add a further US$4.7 trillion to federal debt, according to the Congressional Budget Office.
The administration has nevertheless promoted its efforts to reduce government spending, including major federal workforce cuts pursued through the Department of Government Efficiency.
But much of the reduction has focused on discretionary spending, which represents the smallest component of the federal budget.
The US government spends roughly US$7 trillion a year, with about 60% allocated to mandatory programmes such as Social Security, Medicare, Medicaid and veterans’ benefits. Those programmes are generally structured to rise alongside demographic and cost pressures.
The government also spends about US$1.1 trillion annually on interest payments, a burden that increases as the debt stock expands and borrowing costs remain elevated.
For the first time, debt servicing costs exceeded Pentagon spending in the 2025 fiscal year. During the first 10 months of fiscal 2026, interest payments also surpassed Medicare spending, making debt service the second-largest federal budget item after Social Security.
At the same time, the ageing of the baby-boomer generation is increasing pressure on Social Security and Medicare trust funds, while payroll and income-tax revenues remain insufficient to cover the government’s overall spending commitments.
The combination of rising mandatory spending, elevated interest costs and tax policies that constrain revenues is leaving Washington with an increasingly narrow path to stabilise the nation’s finances. - August 20, 2026
