US National Debt Tops $40 Trillion: How It Happens

The national debt of the United States has surpassed the $40 trillion mark for the first time, according to the US Treasury Department's report released on Wednesday, August 19. The debt held by the public and intergovernmental holdings reached $32.266 trillion and $7.782 trillion, respectively, totaling $40.047 trillion as of Tuesday.

This milestone was reached several months ahead of schedule, reflecting the persistent budget deficit of the US federal government, as spending continues to exceed revenue, adding to the national debt.

The US federal government's spending on the COVID-19 pandemic response, tax cuts, and increased military spending have contributed to the rapid growth of the federal debt over recent years. This has raised concerns in the bond market and pushed up government bond yields, leading to increased interest payments that further inflate the total national debt.

In the first nine months of the fiscal year 2026, which began on October 1, 2025, the federal government recorded a fiscal deficit of $1.367 trillion. Net interest payments reached $827 billion, surpassing defense spending of $713 billion and ranking as the second-largest expenditure, just behind Social Security spending of $1.244 trillion.

White House spokesperson Kush Desai responded to the alarming milestone, stating that former President Joe Biden's fiscal mismanagement was to blame. Desai claimed that the Trump administration had been focused on slashing waste, fraud, and abuse in federal spending while accelerating economic growth to bring the debt-to-GDP ratio back on track.

However, experts warn that the current fiscal trajectory is unsustainable, as the debt's impact is felt throughout the economy and can eventually affect the cost of living and investment opportunities.