The United States has crossed a historic fiscal milestone, with total federal debt surpassing $40 trillion for the first time, according to new Treasury data. The figure reflects a decade of rapid borrowing driven by pandemic spending, rising costs for social programmes, and interest payments that now outpace several major government departments.
The Treasury reported total public debt outstanding at $40.047 trillion, including $32.3 trillion held by investors and $7.8 trillion in internal government accounts. The debt load has more than doubled since early 2017, when Donald Trump began his first term. Roughly one‑third of the increase came from emergency COVID‑19 spending under both Trump and Joe Biden, while long‑standing tax cuts and structural budget pressures account for much of the rest.
Fiscal watchdogs warn that the U.S. is edging closer to a potential debt crisis unless lawmakers confront widening deficits. Maya MacGuineas of the Committee for a Responsible Federal Budget said the burden is increasingly felt across the economy, fuelling inflation, crowding out other priorities, and limiting the government’s ability to respond to future shocks.
Investor appetite for U.S. debt also appears to be shifting. Foreign demand has weakened, and yields on long‑term Treasury bonds have climbed to their highest levels in nearly two decades. In response, Treasury Secretary Scott Bessent announced a doubling of buyback operations for 10‑ to 30‑year bonds to help ease market pressure.
Trump, asked about bond market volatility, dismissed concerns and repeated his call for lower interest rates, arguing that a strong U.S. economy should support cheaper borrowing.
The fiscal strain is increasingly visible in monthly data. The government posted a $432 billion deficit in July, one of the largest on record, driven by rising Social Security and Medicare costs and falling customs revenues. Interest payments have now overtaken Medicare spending, becoming the second‑largest item in the federal budget after Social Security.
Both Trump and Biden oversaw major increases in public debt:
Trump: +$11.6 trillion across two terms, including pandemic‑era borrowing and new legislative spending.
Biden: +$8.4 trillion during his four‑year term, driven by COVID‑19 recovery measures, infrastructure investment and clean‑energy subsidies.
With an ageing population, rising healthcare obligations, and tax revenues unable to keep pace, analysts warn that the U.S. faces a long‑term structural challenge that will require politically difficult choices on taxes, spending, or both.
