US National Debt Surpasses $40 Trillion for First Time

The US Treasury Department confirmed Wednesday that total national debt has crossed $40 trillion for the first time, marking a milestone that has raised fresh concerns about the country’s fiscal trajectory. The figure includes $32.266 trillion in Treasury securities held by the public and $7.782 trillion in intra-governmental debt. This represents more than double the $19.95 trillion figure recorded when Trump first took office in January 2017.

Watchdog Groups Warn of Growing Fiscal Strain

Budget experts had anticipated the milestone for weeks. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the debt burden ripples through the broader economy, worsening inflation and limiting flexibility for other budget priorities. She noted the debt jumped from $39 trillion to $40 trillion in under five months, a pace she called strikingly predictable for a major economic power in decline.

Foreign Demand for Treasuries Shows Signs of Cooling

Demand from foreign investors, who hold roughly a third of outstanding Treasuries, has softened over the past year. A recent 30-year Treasury bond auction cleared at its highest yield since 2021, and long-bond yields climbed to nearly two-decade highs this week as investors demanded greater compensation for holding US debt. In response, Treasury Secretary Scott Bessent announced Wednesday that buyback operations for 10- to 30-year Treasuries would double to at least $4 billion per operation, aiming to ease upward pressure on yields.

Trump Downplays Bond Market Concerns

Asked about bond market volatility, Trump dismissed worries, saying the country’s strength should ultimately push interest rates lower rather than higher.

Debt Growth Spans Both Administrations

Public debt rose $7.8 trillion during Trump’s first term, more than half of it during pandemic-related spending in his final months in office. Since returning to office in January 2025, debt has grown by another $3.8 trillion, bringing his combined two-term total to $11.6 trillion. Debt increased by $8.4 trillion under President Biden, driven by pandemic recovery spending along with infrastructure and clean energy investments.

Interest Costs Now Rival Major Federal Programs

The Treasury recently reported the fourth-highest monthly deficit in US history for July, at $432 billion, with the fiscal year’s deficit already exceeding all of fiscal 2025 with two months still remaining. Interest payments on the national debt have now surpassed Medicare spending to become the second-largest federal budget line item, trailing only Social Security, as an aging population continues to strain both programs.