The total U.S. public debt has now surpassed $40 trillion for the first time, a threshold crossed as the nation grapples with mounting interest payments and essential social safety-net program costs that outpace revenues. The milestone, reported by the Treasury Department, has prompted renewed warnings from fiscal watchdog groups about a brewing crisis.
According to the Treasury's latest figures, the total public debt outstanding reached $40.047 trillion on Tuesday. This figure encompasses $32.266 trillion in Treasury securities held by the public and $7.782 trillion in intra-governmental debt holdings. The federal government's debt has more than doubled in less than a decade, having stood at $19.95 trillion when President Trump first took office in January 2017.
Approximately one-third of this dramatic increase is attributed to extensive government borrowing undertaken during the COVID-19 pandemic under both the Trump and Biden administrations. The remaining portion of the debt growth is linked to the fiscal policies of both presidents, combined with long-standing imbalances in tax and spending patterns.
Budget watchdogs had anticipated the debt reaching this mark for weeks and have issued stark warnings. They contend that a full-blown debt crisis could emerge if lawmakers do not address the unsustainable fiscal outlook through measures such as raising taxes, cutting spending, or a combination of both.
"Forty trillion dollars of debt doesn't exist solely on the government's ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "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."
MacGuineas also noted that the $40 trillion mark was reached less than five months after the debt hit $39 trillion. She highlighted that the debt has quadrupled in less than 20 years, a stark contrast to the time it took to reach $1 trillion for the first time, which was in 1981. "It is staggering how predictable the fiscal decline of a global power can become," she added.
Investors may be signaling growing caution. Following a recent auction of 30-year Treasury bonds that yielded the highest rate since 2021, yields on long-term bonds reached their highest levels in nearly two decades. This suggests investors are demanding greater compensation for holding U.S. government debt amid substantial issuance.
In response, Treasury Secretary Scott Bessent announced on Wednesday a doubling of buyback sizes for 10- to 30-year Treasuries to at least $4 billion per operation, an effort to push long bond yields lower. The term premium for 10-year Treasuries, a measure of the risk associated with holding them, has also risen to its highest point in over a decade.
Demand for U.S. debt from foreign investors, who hold nearly a third of all Treasuries, has reportedly been declining over the past year. This trend leaves more bonds available to price-sensitive buyers, potentially increasing market volatility, according to John Canavan, lead financial market analyst at Oxford Economics.
Pandemic Spending and Fiscal Trajectories
The Treasury recently reported the fourth-highest monthly deficit in U.S. history, at $432 billion for July. This figure was influenced by tariff refunds negating customs receipts and continued growth in Social Security and Medicare outlays. The deficit for the first 10 months of the fiscal year has already surpassed the total deficit for the entirety of the previous fiscal year with two months remaining.
During his first term, President Trump's administration saw public debt increase by $7.8 trillion, with a significant portion accumulated during the pandemic response in his final nine months. Since his return to office in January 2025, the national debt has grown by an additional $3.8 trillion, bringing the total increase across his terms to $11.6 trillion so far.
President Biden's term has seen an increase of $8.4 trillion in public debt. This borrowing has funded COVID-19 recovery efforts, as well as major investments in infrastructure, clean energy subsidies, and other Democratic Party priorities.
The Committee for a Responsible Federal Budget estimates that policy choices made by both Trump and Biden have placed the federal debt on a trajectory higher than what would have occurred under existing spending statutes when each president took office. For example, the Congressional Budget Office projects that Trump's "One Big Beautiful Bill Act" will add an estimated $4.7 trillion to the debt.
Despite Trump's stated focus on cost-cutting and early actions by the Department of Government Efficiency to reduce federal agency jobs, much of his spending reduction efforts have targeted discretionary programs, which represent the smallest portion of the federal budget. Approximately 60% of the U.S.'s roughly $7 trillion annual spending is allocated to mandatory programs like Social Security, Medicare, and Medicaid, which typically increase with the cost of living.