US National Debt Tops $40 Trillion for First Time

The federal debt topped $40 trillion on Wednesday, according to a Treasury Department daily financial update, marking a new high for government borrowing that shows no sign of slowing.

The milestone comes just five months after the debt surpassed $39 trillion. The government continues piling up debt rapidly, as spending outstrips revenue by more than $2 trillion a year.

"Our current fiscal trajectory is plainly unsustainable, and that's the best-case scenario," said Margaret Spellings, president of the Bipartisan Policy Center. "Even in the rosiest scenarios, we're speeding toward a cliff and refusing to turn the wheel."

The deficit widened further after the Supreme Court struck down many of President Trump's tariffs, forcing the Treasury to refund more than $100 billion in import taxes that had been collected illegally.

The Trump administration sought to blame the ballooning deficit on Democrats. "President Trump pledged to clean up Joe Biden's fiscal mismanagement," White House spokesman Kush Desai said in a statement, adding that the administration has 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."

Government revenues have grown 3% this fiscal year, but spending has grown even faster, and the debt-to-GDP ratio has worsened since Trump returned to office.

The government now spends more than $1 trillion a year just on interest payments, making interest the government's second-biggest expense after Social Security. Interest costs in the first ten months of this fiscal year were 15% higher than the same period last year, reflecting both the growing debt and higher interest rates demanded by investors.

The yield on 30-year Treasuries reached a 19-year high this week, raising borrowing costs across the economy since mortgage rates often track long-term Treasury yields. The average 30-year mortgage rate neared 6.7% last week, according to Freddie Mac.

"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 has shown little appetite for addressing the problem. "$40 trillion should be a wake up call. But neither Congress nor the president have a credible plan to stop it from growing," said Carolyn Bourdeaux, executive director of Concord Action, a fiscal responsibility advocacy group. "We owe the next generation better than this crushing debt and another hollow promise that someone else will deal with it later."