US debt crosses $40 trillion threshold after doubling under Trump and Biden
WASHINGTON, Aug 19 (Reuters) - Total US debt has topped $40 trillion for the first time, the Treasury Department said on Wednesday, drawing fresh warnings that a fiscal crisis is brewing as ballooning costs for social safety-net programs and interest payments far outstrip revenues held back by tax cuts.
On Wednesday, the Treasury Department announced that total U.S. debt has surpassed the $40 trillion mark for the first time, as reported by Reuters. This debt figure includes Treasury securities held by the public, as well as intra-governmental debt holdings.
The debt has nearly doubled in just over a decade, growing from $19.95 trillion when President Donald Trump took office in January 2017. Roughly one-third of this increase occurred during the two years of government borrowing to fund responses to the COVID-19 pandemic under both Trump and former President Joe Biden.
Budget watchdog groups, such as the nonpartisan Committee for a Responsible Federal Budget, have been warning for weeks that this debt threshold would be crossed. Maya MacGuineas, president of the committee, stated that the rising debt levels exacerbate inflation, squeeze out other budget priorities, and leave the nation vulnerable to domestic emergencies and foreign turmoil.
She further noted that the $40 trillion figure was reached less than five months after hitting $39 trillion and has quadrupled in less than 20 years, growing at a pace significantly faster than the original 1981 timeframe.
Foreign investors holding nearly one-third of Treasuries may already be showing concern, with demand for these holdings declining over the past year. The yield on 30-year Treasury bonds reached its highest level in nearly two decades after a $25 billion auction saw an increase in yields. In response, U.S. Treasury Secretary Scott Bessent announced a doubling of buyback sizes for 10- to 30-year Treasuries to at least $4 billion per operation, aiming to push long bond yields down.
Higher Treasury yields at the longer end of the spectrum tend to push up interest rates for mortgages, car loans, and commercial loans. With debt levels showing no signs of abatement, President Trump repeatedly voiced his demand for lower rates during a White House press conference, stating that the U.S. is a "very powerful country" and should be able to power through these "ridiculous interest rates."
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