US national debt tops $40 trillion for first time

US gross national debt stood at $40.05 trillion at the close of business Tuesday, Treasury Department data released Wednesday showed, passing $40 trillion for the first time.

The figure exceeded an earlier Congressional Budget Office forecast that overall borrowing would reach $39.4 trillion by the end of fiscal year 2026.

The increase comes as longer-term obligations linked to social security and health care have grown and interest payments have climbed. The federal government borrows money when it runs a deficit to cover obligations including spending and tax cuts.

Long-term Treasury bond yields rose Tuesday to their highest level since 2007, reflecting investor concern over price pressures and US deficit spending. The Treasury Department moved early Wednesday to steady the long-term bond market, and yields moved lower.

Jessica Riedl, a budget and tax fellow at the Brookings Institution, said the United States had been on an unsustainable deficit path for some time. She said the country had moved into roughly $2 trillion deficits in recent years and that deficit levels closer to six percent to seven percent of GDP had made markets more nervous.

Analysts said there is no debt-to-GDP level that automatically triggers a crisis. Many economists consider debt held by the public to be the most economically meaningful measure, although the gross debt figure marks a symbolic threshold.

Caleb Quakenbush, director of fiscal policy at the Bipartisan Policy Center, said federal borrowing rose during the Great Recession and after the government's response to the Covid-19 downturn. He said Congress and US administrations had not addressed the trajectory of US budget spending in a “meaningful or durable way.”

Quakenbush warned of uncertainty around current borrowing levels. He said bond markets could face steep challenges in a crisis and that, even outside a crisis, higher borrowing costs for consumers and businesses could squeeze the economy.

Treasury Secretary Scott Bessent had previously set a goal of cutting the US deficit to three percent of GDP.