US debt breaches $40 trillion as fiscal pressures mount

WASHINGTON: The United States has crossed a historic financial threshold, with total federal debt surpassing $40 trillion for the first time.

The US Treasury’s latest figures showed outstanding public debt at about $40.047 trillion on Tuesday. Of this amount, around $32.266 trillion was held by the public, while nearly $7.782 trillion represented intragovernmental holdings.

The debt has more than doubled since January 2017, when Donald Trump began his first presidency. At that time, US federal debt stood at roughly $19.95 trillion.

The latest milestone has renewed concerns over the country’s long-term fiscal position. Budget experts have warned that rapidly rising spending, growing interest costs and weaker government revenues could increase the risk of a broader fiscal crisis.

Debt accumulation has accelerated under successive administrations. During Trump’s two terms so far, US debt has increased by approximately $11.6 trillion. Around $7.8 trillion was added during his first term, with a large portion linked to emergency spending during the COVID-19 pandemic.

Since Trump returned to the White House in January 2025, the national debt has risen by another $3.8 trillion.

Former President Joe Biden’s four-year administration also saw a significant increase. US debt grew by about $8.4 trillion during his presidency. The increase was linked to pandemic recovery measures as well as major spending programmes involving infrastructure, clean energy and other government priorities.

The rising debt burden is also increasing the government’s interest expenses. The United States is now spending more than $1 trillion annually on interest payments.

Interest costs have become one of the largest items in the federal budget. During the first 10 months of the 2026 fiscal year, interest payments exceeded spending on Medicare and became the second-largest federal budget item after Social Security.

The government is also facing growing costs from Social Security, Medicare, Medicaid and veterans’ programmes. These programmes account for a large share of federal spending and are expected to remain under pressure as the population ages.

Meanwhile, government revenues have struggled to keep pace with spending. Tax cuts have further constrained revenue, while spending on mandatory programmes and debt servicing continues to rise.

The US recorded a $432 billion budget deficit in July, one of the largest monthly deficits in the country’s history. The deficit during the first 10 months of the current fiscal year has already surpassed the entire shortfall recorded in fiscal 2025.

Financial markets are also showing signs of concern. Investors have demanded higher returns on long-term US government bonds. Yields on long-term Treasury securities recently reached their highest levels in nearly two decades.

Higher Treasury yields can translate into increased borrowing costs for households and businesses. Mortgage rates, car loans and commercial borrowing can all be affected when government bond yields rise.

US Treasury Secretary Scott Bessent has responded by increasing the size of Treasury buyback operations involving longer-term government bonds. The move is intended to support market conditions and help ease pressure on long-term yields.

Trump, however, has dismissed concerns over recent bond-market volatility. He has repeatedly called for lower interest rates, arguing that a strong US economy should lead to cheaper borrowing costs.

The debt increase has also raised concerns among international investors. Foreign investors hold a significant share of US Treasury securities, but demand from overseas buyers has weakened over the past year.

The Congressional Budget Office has separately estimated that Trump’s major second-term legislative package, known as the One Big Beautiful Bill Act, could add about $4.7 trillion to the federal debt.

Fiscal watchdogs say the latest $40 trillion milestone should serve as a warning to policymakers. They argue that lawmakers will eventually have to confront the gap between government revenues and spending.

Possible measures include raising taxes, reducing expenditure or adopting a combination of both.

The scale of the debt has changed dramatically over the decades. The US government first crossed the $1 trillion debt mark in 1981. It has now reached $40 trillion, underscoring the rapid expansion of federal borrowing.