United States: National Debt Surpasses $40 Trillion for the First Time

Thursday 20 August 2026 - 07:04

The American federal debt has just crossed a historic threshold. According to data from the Treasury Department, the total debt has exceeded $40 trillion, in a context marked by rising expenditures, persistent deficits, and higher financing costs for the U.S. government.

A Historic Milestone Reached Sooner Than Expected

The national debt of the United States has surpassed the $40 trillion mark for the first time. Following a new issuance of Treasury bonds on Tuesday, the total stood at $40.047 trillion, according to data released on Wednesday by the U.S. Treasury Department.

This level has been reached more quickly than budget projections had anticipated. The Congressional Budget Office (CBO) had previously estimated a federal debt nearing $39.4 trillion by the end of the year.

The crossing of this symbolic threshold thus occurs several months ahead of projections, illustrating the rapid pace at which federal borrowing continues to grow.

Interest Rates Add to the Burden

The increase in debt is not solely explained by new borrowing intended to finance public expenditures. The rise in interest payments made by the government is also a major contributing factor.

Financing conditions have indeed tightened. Markets remain concerned about inflation prospects, particularly in a context of geopolitical tensions and rising energy prices.

The yield on 30-year U.S. Treasury bonds reached its highest level since 2007 on Tuesday. When rates increase, the cost of refinancing debt mechanically rises, which can in turn contribute to widening deficits.

Washington Attempts to Calm the Markets

In the face of this tension in the bond markets, the Treasury Department announced on Wednesday an increase in long-term bond buybacks starting in September.

This decision has helped reassure investors and ease yields. However, it does not address the structural issue of American debt, which is based on a persistent imbalance between public revenues and federal expenditures.

The dynamics remain closely monitored as the United States must continue to finance its commitments while facing high borrowing costs.

Debt Has More Than Doubled Since the Financial Crisis

The scale of the phenomenon is even clearer when placed in a historical context. The U.S. debt has more than doubled since the 2008 financial crisis.

It now represents nearly 125% of the American gross domestic product. Budget deficits have also changed in scale. While a deficit between 3% and 4% of GDP could once raise significant concerns in the markets, they are now around 6% to 7% of GDP.

According to Jessica Riedl, a budget specialist at the Brookings Institution, this trend reflects an unsustainable deficit pace in the long term.

Promises to Reduce the Deficit Put to the Test

The issue is all the more sensitive as Donald Trump had promised, during his two terms, to reduce public spending and reverse the federal deficit.

Treasury Secretary Scott Bessent had set a goal of reducing the deficit to 3% of GDP. However, the recent trajectory of public finances has diverged from this ambition.

The repayment of tariffs to companies, after their cancellation by the Supreme Court in February, has notably contributed to widening the deficit in recent months.

This is compounded by the effects of tax cuts and increased public spending, particularly in the military sector.

The Cost of the Conflict with Iran Adds to Federal Expenditures

Expenditures related to the conflict with the Islamic Republic of Iran are also a pressure factor on American finances.

Military commitments require additional resources at a time when the federal budget must already absorb significant expenditures in other areas.

This accumulation of burdens occurs as the cost of financing debt rises, creating a scissor effect that is particularly monitored by economists and investors.

$40 Trillion Alone Does Not Indicate a Crisis Threshold

Crossing the $40 trillion mark does not automatically mean that the United States is heading towards a financial crisis.

Analysts emphasize that there is no precise level of debt relative to GDP beyond which a crisis would mechanically trigger. The situation depends on economic growth, interest rates, investor confidence, and the government's ability to stabilize its finances.

Another indicator that is particularly closely watched is the debt held by the public. This excludes claims held by one federal agency against another and allows for a better assessment of the debt actually exposed to the markets.

Nevertheless, crossing the $40 trillion threshold serves as a major warning about the American budget trajectory. With high deficits and increasingly costly interest, Washington will need to find a delicate balance between financing its priorities, supporting the economy, and controlling debt.