US National Debt Tops $40 Trillion for First Time, Nears Statutory Ceiling

Fiscal Crisis Warning Signs

'Everyday Living Costs Will Rise'

The US national debt has surpassed $40 trillion for the first time, heightening concerns over a worsening fiscal spiral. Rising interest costs on Treasuries are straining federal spending, while additional borrowing and higher rates threaten to drive the debt burden even higher.

According to the US Treasury on Aug. 19, total federal debt stood at $40.047 trillion as of the previous day. That puts the government less than $1 trillion below the statutory debt ceiling of $41.1 trillion. Debt held by the public totaled $32.266 trillion, while intragovernmental holdings stood at $7.782 trillion.

National debt refers to the total principal amount of outstanding US Treasury securities issued by the federal government. It combines debt held by the public — obligations to individuals, financial institutions and foreign investors — with intragovernmental holdings, or Treasury securities held in internal federal accounts such as Social Security trust funds.

US debt first crossed $30 trillion in January 2022. It has since increased by $10 trillion in four years and seven months. Compared with the $19.95 trillion recorded when President Donald Trump took office in 2017, the total has doubled in nine years. Debt rose by $11.6 trillion during Trump's first term and by $8.4 trillion during former President Joe Biden's four years in office.

Large-scale fiscal spending tied to the Covid-19 response, tax cuts, and rising Social Security and healthcare costs were the main drivers of the increase under both presidents.

Concerns are also growing over the interest burden. Bloomberg reported that, with roughly two months left before the end of fiscal 2026, the federal government's cumulative interest expense had reached $1.17 trillion, up 15% from a year earlier. Interest payments are now the third-largest item in the federal budget.

Higher Treasury yields could deepen the problem. As borrowing costs rise, the government may need to issue more debt, further increasing the burden and prompting investors to demand still higher yields.

Fiscal watchdog groups had been warning for weeks that US debt was about to top $40 trillion. Michael Peterson, chief executive officer of the Peterson Foundation, said he hopes crossing that threshold will serve as a wake-up call in Washington. Failure to bring the debt under control will raise the cost of everyday life across the US, he added.

Margaret Spellings, president of the Bipartisan Policy Center, said the latest grim milestone shows Washington can no longer ignore the fundamental imbalance between revenue and spending. She called for structural measures including tax increases and spending cuts.

Kang Kyung-ju, Hankyung reporter, qurasoha@hankyung.com