The total US government debt has passed $40 trillion for the first time, the Treasury Department reported this week. The national debt reached $40.05 trillion, adding a new milestone to decades of rising federal borrowing.
How the debt grew
The debt has doubled in about a decade. Ten years ago it stood at $19.4 trillion, and in August 2016 it was just below $20 trillion. The climb has accelerated in recent years, pushed higher by pandemic-era stimulus spending, defense outlays, and rising costs for Social Security and Medicare. The United States hit $39 trillion in March and $38 trillion in October last year, a pace of roughly one trillion dollars every five months.
Treasury also reported a $432.3 billion deficit for July, the highest monthly shortfall since March 2021. The year-to-date deficit is approaching $1.8 trillion, above the same period a year ago.
The cost of interest
Paying for all that borrowing is now a major line item in the federal budget. Annual interest on the debt tops $1 trillion, making it the government's second-largest expense after Social Security. Higher interest rates have raised the cost of new borrowing, so investors are demanding more compensation to hold government bonds.
For ordinary Americans, the scale is hard to grasp. With a population of roughly 343 million, the $40 trillion debt works out to about $117,000 per person. Economists warn the burden will keep growing unless lawmakers change course.
What happens next
The debt also faces a legal ceiling. The United States has a statutory debt limit that Congress must raise or suspend to allow more borrowing. The Bipartisan Policy Center estimates the country will reach the current limit of $41.1 trillion sometime between late winter and mid-summer of 2027, forcing another round of political fights in Washington.
"The federal debt is already raising the cost of living and choking out other spending and investment," said Margaret Spellings, president and CEO of the Bipartisan Policy Center. Watchdogs point to the record as a warning about the path of fiscal policy, even as the milestone itself changes little in day-to-day markets.