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The U.S. national debt surpassed $40 trillion on Wednesday, reaching another record level as the federal government continues to spend more than it collects in revenue and shows little sign of slowing the pace of borrowing.
The Treasury Department reported the milestone in its daily financial update, marking the latest escalation in a debt burden that has grown rapidly in recent years. The national debt crossed $39 trillion just five months ago.
The federal government is running annual deficits of more than $2 trillion, with spending continuing to outpace revenue despite efforts by the Trump administration to reduce federal spending and accelerate economic growth.
“Our current fiscal trajectory is plainly unsustainable, and that’s the best-case scenario,” Margaret Spellings, president of the Bipartisan Policy Center, said. “Even in the rosiest scenarios, we’re speeding toward a cliff and refusing to turn the wheel.”
The $40 trillion milestone comes as the government faces rising interest costs, higher borrowing rates and growing pressure on the federal budget.
Government spending continues to outpace revenue
Federal revenues have increased by about 3% this fiscal year, but government spending has grown faster, widening the gap between what Washington collects and what it spends.
The Trump administration has blamed Democrats for the country’s fiscal problems while arguing that its policies are aimed at reducing waste and boosting economic growth.
“President Trump pledged to clean up Joe Biden’s fiscal mismanagement,” White House spokesman Kush Desai said in a statement. “That’s why the Trump administration has been focused on slashing waste, fraud, and abuse in federal spending while accelerating economic growth to get America’s debt-to-GDP ratio trending in the right direction again.”
But the debt-to-GDP ratio has deteriorated since Trump returned to the White House, according to the figures cited in the report.
The government is now spending more than $1 trillion a year on interest payments alone. Interest has become the federal government’s second-largest expense, behind Social Security.
Interest costs during the first 10 months of the fiscal year were 15% higher than during the same period a year earlier. The increase reflects both the sheer size of the federal debt and higher interest rates demanded by investors who purchase U.S. government bonds.
Tariff refunds add to fiscal pressure
The government’s fiscal position has also been complicated by the Supreme Court’s decision to strike down many of Trump’s tariffs.
The ruling forced the Treasury to refund more than $100 billion in import taxes that had been collected under tariffs later deemed unlawful, adding another financial burden to an already strained budget.
The episode also underscores the uncertainty surrounding tariff revenue as the administration continues to use import taxes as a major component of its economic policy.
Bond markets show signs of concern
The debt milestone comes as financial markets are already reflecting concerns about the government’s borrowing needs.
The yield on 30-year U.S. Treasury bonds reached a 19-year high this week. Higher Treasury yields can translate into more expensive borrowing across the economy because mortgage rates and other long-term interest rates often move in the same direction.
The average rate on a 30-year mortgage approached 6.7% last week, according to Freddie Mac.
That means the government’s growing debt burden can have consequences well beyond Washington, potentially increasing borrowing costs for households and businesses.
“Federal debt is already raising the cost of living and choking out other spending and investment, threatening our economy and Americans’ long-term prosperity,” Spellings said.
Congress faces pressure to act
Despite the increasingly expensive debt burden, Congress has shown little appetite for making the politically difficult decisions needed to substantially reduce annual deficits.
Those decisions could involve some combination of spending reductions, tax increases, entitlement changes or policies designed to increase economic growth. None offers an easy solution, particularly as lawmakers face competing demands for federal spending.
Carolyn Bourdeaux, executive director of Concord Action, a group that advocates for fiscal responsibility, said the $40 trillion milestone should force lawmakers to confront the problem.
“$40 trillion should be a wake-up call,” Bourdeaux said. “But neither Congress nor the president have a credible plan to stop it from growing.”
The milestone also comes with long-term implications. As more federal revenue is consumed by interest payments, less money is available for other priorities, potentially limiting the government’s ability to respond to future economic downturns, national emergencies or other spending needs.
“We owe the next generation better than this crushing debt and another hollow promise that someone else will deal with it later,” Bourdeaux said.
For now, the trajectory remains clear: the national debt is growing faster than the government’s ability to address it, while the cost of carrying that debt continues to rise.
