US national debt doubles in decade to pass $40tn milestone
US government debt has more than doubled over ten years to reach $40.05tn, driven by heavy spending and rising interest payments, as the Treasury moves to ease long‑term borrowing costs ahead of the midterm elections.
US national debt has more than doubled in a decade to reach $40.05 trillion, Treasury figures revealed, underscoring the scale of federal borrowing under successive administrations as heavy spending and higher interest payments have steadily swollen the total. The Congressional Budget Office had projected overall borrowing would reach $39.6tn by the end of fiscal year 2026, but faster‑than‑expected growth has sharpened concerns about the government’s rising financing needs and the implications for future interest costs. With the US now nearing its $41.1tn debt ceiling, the CBO projects that the debt will climb to about $64tn by 2036.
The rise reflects years of deficit spending under both Presidents Trump and Biden, but the pressure has been compounded by a surge in bond yields, which influence how much the government, companies and consumers pay to borrow. The interest rate on 30‑year Treasury bonds hit 5.34 per cent on Tuesday, the highest level in almost two decades, before easing to 5.18 per cent after the Treasury Department announced it would double its bond buyback operations from $2bn to $4bn, effective from 9 September to 4 November. The intervention, described by the Treasury as an effort to provide “greater liquidity support” for longer‑term bonds, appeared to be an attempt to relieve pressure on long‑term borrowing costs, which had been driven higher by rising oil prices linked to the US‑Iran war, inflation fears, and heavy sovereign and corporate debt issuance.
While ordinary Americans are unlikely to feel the immediate effects, economists warn that difficulties in managing the debt could eventually trigger disruptions on a scale similar to the 2008 financial crisis. David Jacks of the National University of Singapore said the pace of America’s borrowing was accelerating, adding: “At some point, the bills will come due.” John Canavan, lead analyst at Oxford Economics, said the Treasury’s move was an “attempt to provide relief” on long‑term yields, but given the size of outstanding debt, the increase in buybacks was “unlikely to provide meaningful long‑term relief”.
Rene Albrecht, senior analyst at DZ Bank, said the government feared the “pain of 5 per cent or higher yields” not just because it raised public borrowing costs, but also private sector rates, with midterm elections only three months away. “They have had to grab into the toolkit in order to get a hand on the recent rise in yields,” he said. Economist Mohamed A. El‑Erian suggested the move might signal a broader strategy to control interest rates—so‑called yield curve control—but warned that it “risks collateral damage and unintended consequences”.
The US debt‑to‑GDP ratio now stands at 125.8 per cent, according to the International Monetary Fund, one of the highest among major economies, compared with 103.6 per cent for the UK and 106.9 per cent for China. Japan leads with a ratio above 200 per cent. Meanwhile, the average rate on 30‑year fixed mortgages has risen to 6.67 per cent, though still below the 7.7 per cent peak of 2023. Minutes from the Federal Reserve’s last meeting revealed that concerns over inflation deepened among policymakers, with several participants favouring rate increases and many suggesting that further hikes would likely be necessary if inflation did not decline. The Fed is expected to hold rates steady at its September meeting, but the trajectory of borrowing costs remains uncertain as the world’s largest economy confronts its ever‑growing debt mountain.