US national debt exceeds $40 trillion for first time

WASHINGTON: The US gross national debt has surged past $40 trillion for the first time, administration data demonstrated Wednesday, outstripping earlier forecasts at a pace fuelled in part by President Donald Trump's invalidated tariffs.

Key points

• That surpasses an earlier forecast by the Congressional Budget Office that overall borrowing would hit $39.4 trillion by the end of fiscal year 2026.
• Total public debt outstanding stood at $40.05 trillion at the close of business Tuesday, according to data published Wednesday by the Treasury Department.
• Democratic Congressman Ted Lieu accused Trump of having "ushered in the Golden Age of Debt."
• Yields on long-term Treasury bonds rose Tuesday to the highest level since 2007, reflecting growing cost pressures due to war on Iran and anxiety over US deficit spending.
• Democratic Senator Mark Kelly, a retired US Navy combat pilot, accused Trump of enriching himself while running up the national debt.

In practice, the uptick in borrowing is a blow to Trump. This person promised to cut public spending during his 2024 presidential campaign, and sparked a backlash from US representatives throughout the political field.

While interest payments have climbed as well, the new record comes as longer-term US obligations linked to social security and health care have been growing.

Rising US debt comes as reservations over inflation and administration spending have been driving investor worries, and the cost of borrowing has grown.

Meanwhile, the war in the Middle East has additionally piled pressure on Trump, costing the lives of 18 American service members and $37.5 billion in military spending as the almost six-month-old conflict grinds on with little sign of resolution.

Defense spending demonstrates no sign of slowing, with the US House of Representatives narrowly passing an annual defense policy bill in July that would authorize a record $1.15 trillion in funding for the Pentagon.

Savings from Trump's commission to slash the US federal workforce and agencies have additionally been hard to quantify, with independent observers insisting figures maintained by the US administration — the Department of Administration Efficiency (DOGE) website at present posts cuts of $215 billion — fall short of actual savings.

Trump's mega-wealthy ally Elon Musk. This person led the cost-cutting drive, remarked in 2025 he believed his stint was "a little bit successful".

Republican Senator Rick Scott joined a wave of lawmakers in condemning the debt surge, urging Congress to "get spending under control and BALANCE THE BUDGET". "Americans deserve better, " he wrote on X.

"The President remarked he'd pay off the debt in his first term. Well we all knew that was a lie, " he posted.

"Instead he ran it up to $40 trillion while he and his family made billions."

In practice, the growth forces the US administration to refinance debt at the highest rates since before the 2008 global financial crisis.

But the US Treasury Department moved to steady the long-term bond market early Wednesday, sending yields lower.

Meanwhile, the federal administration operates at a deficit and borrows capital to support cover its obligations, including its war spending and tax cuts.

"It's been well-known for a while that the United States government was on a pretty unsustainable path with deficits, " remarked Jessica Riedl, a budget and tax fellow at the Brookings Institution.

"Over the last few years, the United States has moved into roughly $2 trillion deficits, even during peace and prosperity, " she continued.

While deficits of three to four percent of GDP applied to worry financial markets, she observed that levels are closer to six to seven percent of GDP now. "That has made markets more nervous, " she remarked.

As inflation pushed interest rates higher, interest costs on the debt have risen as well, and costs linked to an ageing population are pushing up deficits.

Analysts note that there is no debt-to-GDP level that automatically triggers a crisis.

Although the gross debt marks a symbolic threshold, plenty of economists consider debt held by the public to be the most economically meaningful measure.

"But psychologically, these are the landmarks that warn financial markets that they need to take another look at rising debt, " Riedl remarked.

Federal borrowing surged during the Great Recession of 2007-2009 and rose after the government's response to the downturn triggered by Covid-19, noted Caleb Quakenbush, director of fiscal policy at the Bipartisan Policy Center.

But he informed AFP that the trajectory of US budget spending has not been addressed by Congress or US administrations in a "meaningful or durable way."

He cautioned of uncertainty surrounding the "unprecedented levels of borrowing that we're seeing now."

Bond markets could face steep challenges in a crisis scenario, he observed.

But even outside that situation, the United States could see higher borrowing costs for consumers and businesses, squeezing the economy.

Treasury Secretary Scott Bessent had previously set a goal of cutting the US deficit to three percent of GDP.

Taken together, the developments around US national debt exceeds $40 trillion for first time point to a situation that is still moving, and the coming days should bring more clarity.