US National Debt Surpasses $40 Trillion For First Time

The US national debt has surpassed $40 trillion for the first time, marking a major fiscal milestone and underscoring the long-running imbalance between federal spending and government revenue.

According to US Treasury data, total federal debt stood at approximately $40.047 trillion, including $32.266 trillion held by the public and $7.782 trillion in intragovernmental holdings. The debt has more than doubled from about $19.95 trillion in January 2017, when Donald Trump first took office.

The increase has been driven by a combination of pandemic spending, persistent budget deficits, tax cuts, rising entitlement costs and rapidly increasing interest payments. Analysts have cautioned that the buildup cannot be attributed to a single administration, with borrowing rising under successive presidents.

The sharpest acceleration came during the COVID-19 pandemic, when Washington deployed trillions of dollars in emergency aid to support households, businesses and the wider economy. Although the spending helped cushion the economic impact of the pandemic, federal borrowing remained elevated after the crisis.

US debt increased by approximately $7.8 trillion during Trump's first term, much of it during the pandemic. It rose by another $8.4 trillion during Joe Biden's presidency, while debt has increased by roughly $3.8 trillion since Trump returned to office in January 2025, according to Reuters calculations based on Treasury data.

At the heart of the problem is a persistent gap between federal spending and revenue. Major programmes including Social Security, Medicare, Medicaid and veterans' benefits account for a growing share of expenditure, while an ageing population and rising healthcare costs are adding to spending pressures.

Tax policy has also played a role. Earlier tax cuts reduced federal revenue, while spending on infrastructure, healthcare, defence, clean energy and industrial policy has remained significant.

The scale of the deficit has continued to grow. In July, the Treasury reported a $432 billion budget deficit, while borrowing during the first 10 months of fiscal 2026 had already exceeded the full-year deficit recorded in fiscal 2025.

Another major concern is the cost of servicing the existing debt. Annual federal interest payments have climbed to approximately $1.1 trillion, according to Reuters reporting. In fiscal 2025, interest costs surpassed defence spending, while during the first 10 months of fiscal 2026 they also overtook Medicare, making interest the government's second-largest expenditure after Social Security.

Higher interest costs can create a self-reinforcing cycle. As debt increases, the government spends more on interest, which can widen the deficit and require additional borrowing.

The borrowing surge is also being closely watched by Treasury investors. With the government issuing large volumes of debt, investors have demanded higher yields on some longer-term securities. Higher Treasury yields can also raise mortgage rates, corporate borrowing costs and consumer credit rates.

The Treasury has expanded bond buybacks in selected longer-dated securities to support liquidity and market functioning.

Crossing $40 trillion does not immediately indicate a fiscal crisis. The US dollar remains the world's dominant reserve currency, while Treasury securities continue to serve as a key global safe-haven asset.

However, the pace of accumulation is raising concerns about the sustainability of US finances. The country took until 1981 to reach its first $1 trillion in national debt. It has now crossed $40 trillion, with the latest trillion added within months.