US federal debt crosses $40 trillion after doubling across a decade of deficits

Debt crosses the threshold

The United States Treasury Department reported total public debt outstanding reached $40.047 trillion on 18 August 2026. The total includes $32.266 trillion in Treasury securities held by the public and $7.782 trillion in intra-governmental holdings. The federal debt has doubled from $19.95 trillion in January 2017, when Donald Trump began his first presidential term. Borrowing accelerated across the past year, rising by $3 trillion from the $37 trillion mark recorded twelve months earlier. Total debt passed $38 trillion in October 2025 and $39 trillion in March 2026 before crossing the latest threshold five months later.

Structural budget deficits and revenue pressures

The figure outpaced projections from the Congressional Budget Office, which estimated that public debt would stand near $39.4 trillion at the close of fiscal year 2026 in September. The CBO expects the federal budget deficit to reach $1.9 trillion in 2026, or 5.8% of gross domestic product. Total debt now represents nearly 125% of GDP, with debt held by the public standing at 101% of GDP and projected by the CBO to reach 120% by 2036. That trajectory would surpass the post-World War II peak of 106% of GDP.

Budget watchdog organizations cited statutory entitlement growth alongside discretionary spending and tax reductions as primary drivers. Margaret Spellings, chief executive of the Bipartisan Policy Center, warned of the budgetary imbalance:

Our federal programs spend much more than the government takes in, and the biggest-ticket items in the federal budget are all running on autopilot. Federal debt is already raising the cost of living and choking out other spending and investment, threatening our economy and Americans' long-term prosperity.

Annual spending by the administration currently exceeds tax revenues by approximately $2 trillion. Federal revenues were reduced after the Supreme Court ruled in February that global import tariffs imposed by the Trump administration were illegal. Spending has also been driven higher by military operations connected to the conflict in Iran, while tax cuts approved in 2025 are projected to widen the annual deficit to more than $4 trillion over the next decade.

Rising interest costs and Treasury intervention

Higher interest rates have multiplied the cost of servicing federal obligations, with annual interest payments exceeding $1 trillion. Net interest spending has surpassed outlays for national defense, becoming the second-largest federal budget item after Social Security. In bond markets, yields on 30-year Treasury bonds reached their highest levels since 2001 following a $25 billion auction, while 10-year note auctions drew yields not seen since 2007.

Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget, described the rapid debt accumulation:

It doesn't mean that your engine's going to melt down tomorrow, but it's a good signal that things are pretty out of control. And it's not just the magnitude, it's the speed at which we've hit it.

In response to market pressures, Treasury Secretary Scott Bessent announced that the department would double its bond buyback operations. The Treasury is expanding purchases of 10-year to 30-year government debt to at least $4 billion per operation to provide liquidity and stabilize long-term borrowing costs.