US Debt Crosses $40 Trillion as Fiscal and Interest Costs Mount

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.S. government debt has surpassed $40 trillion for the first time, highlighting growing concerns about the country’s fiscal outlook as spending on social programs and interest payments continues to rise faster than government revenues.

The Treasury Department reported that total U.S. public debt reached $40.047 trillion on Tuesday. Of that amount, $32.266 trillion was debt held by the public, while $7.782 trillion represented intragovernmental holdings.

The debt has more than doubled since Donald Trump first took office in January 2017, when it stood at about $19.95 trillion. Around one-third of the increase occurred during the COVID-19 pandemic, when the Trump and Biden administrations borrowed heavily to finance emergency economic support.

Debt and interest costs continue to rise

Budget watchdogs have warned that the growing debt burden could eventually trigger a serious fiscal crisis unless lawmakers take steps to reduce spending, increase revenues, or pursue a combination of both.

“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,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

The debt reached $40 trillion less than five months after passing $39 trillion, underscoring the rapid pace of government borrowing.

The United States is also facing rising borrowing costs as investors demand higher yields on Treasury securities. Thirty-year Treasury yields recently reached their highest level in nearly two decades, while demand from foreign investors has weakened.

Higher Treasury yields can increase borrowing costs across the economy, affecting mortgages, auto loans and business financing.

Treasury Secretary Scott Bessent responded Wednesday by announcing that the government would double the size of some Treasury buyback operations to at least $4 billion per transaction, in an effort to support the longer-term bond market.

Trump has repeatedly called for lower interest rates. Asked whether Americans should be concerned about volatility in the bond market, he said he was not worried and argued that a strong U.S. economy should lead to lower rates

Trump and Biden both oversaw large increases

The growth in U.S. debt has accelerated under both Trump and former President Joe Biden.

Debt increased by about $7.8 trillion during Trump’s first term, with more than half of that increase accumulating during the final nine months as the government responded to the pandemic.

Since Trump returned to office in January 2025, the debt has risen by another $3.8 trillion, bringing the increase across his two terms to about $11.6 trillion so far.

During Biden’s four-year presidency, federal debt increased by approximately $8.4 trillion, driven partly by pandemic recovery spending as well as investments in infrastructure, clean energy and other government programs.

Trump’s second-term legislative agenda is also expected to add significantly to future borrowing. The Congressional Budget Office estimates that his major tax-and-spending package, known as the One Big Beautiful Bill Act, could add about $4.7 trillion to the national debt.

Meanwhile, the federal government continues to face large annual deficits. The Treasury reported a $432 billion deficit in July, the fourth-largest monthly deficit in U.S. history.

Interest becomes a major budget burden

Rising debt is making interest payments an increasingly important part of federal spending.

The government spends roughly $7 trillion annually, with about 60% going toward mandatory programs such as Social Security, Medicare, Medicaid and veterans’ benefits.

Interest payments on the national debt now account for roughly $1.1 trillion annually. In fiscal 2025, debt-service costs exceeded Pentagon spending for the first time.

During the first 10 months of fiscal 2026, interest costs surpassed Medicare spending, becoming the second-largest federal budget item after Social Security.

The pressure is expected to grow as the aging population increases demand for retirement and health care programs while tax revenues remain insufficient to cover federal spending.

The crossing of the $40 trillion threshold has therefore renewed concerns about whether Washington can stabilize its finances while maintaining major social programs, funding national priorities and managing the rising cost of borrowing.

(Source: Reuters)