U.S. debt balloons to more than $40-trillion after doubling under Trump, Biden

Total U.S. debt has topped US$40-trillion for the first time, the Treasury Department said on Wednesday, drawing fresh warnings that a fiscal crisis is brewing as ballooning costs for social safety-net programs and interest payments far outstrip revenues held back by tax cuts.

The Treasury’s latest daily cash and debt balances statement showed total public debt outstanding at US$40.047-trillion on Tuesday, a total that includes Treasury securities held by the public of US$32.266-trillion and intra-governmental debt holdings of US$7.782-trillion.

The federal government’s IOU has now more than doubled in less than a decade, from US$19.95-trillion when President Donald Trump was sworn in for the first time in January 2017.

Roughly one-third of that increase occurred during two years of frantic government borrowing to fund the COVID-19 pandemic responses undertaken by Trump and former President Joe Biden, while the fiscal policy choices of both presidents combined with long-running tax-and-spending imbalances to account for the rest.

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Budget watchdog groups have been anticipating the crossing of the threshold for weeks and have issued stark warnings that a full-blown debt crisis could erupt unless lawmakers confront an unsustainable fiscal outlook and raise taxes, cut spending or both.

“US$40-trillion of debt doesn’t exist solely on the government’s ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another,” said Maya MacGuineas, president of the non-partisan Committee for a Responsible Federal Budget.

“The more we borrow, the more we exacerbate inflation, squeeze out other priorities in the budget, and leave ourselves vulnerable to emergencies at home and turmoil abroad,” MacGuineas said in a statement just after the Treasury data was released.

She noted that the US$40-trillion figure was reached less than five months after debt reached US$39-trillion, and has quadrupled in less than 20 years after taking until 1981 to reach US$1-trillion for the first time.

“It is staggering how predictable the fiscal decline of a global power can become,” MacGuineas added. Global U.S. creditors may already be growing wary.

Days after a US$25-billion auction of 30-year Treasury bonds went off at the highest yield since 2021, yields on so-called long bonds on Tuesday hit their highest levels in nearly two decades as investors demanded greater compensation in the face of hefty U.S. government bond issuance.

On Wednesday, U.S. Treasury Secretary Scott Bessent took a bold step to push long bond yields back, announcing a doubling of buyback sizes for 10- to 30-year Treasuries to at least US$4-billion per operation. The term premium for 10-year Treasuries – a measure of how much of the security’s overall yield is accounted for by the perceived risk of holding them over a decade – rose this week to its highest in more than a dozen years.

Against all that, demand for U.S. debt by foreign investors – who hold nearly one-third of all Treasuries – has been declining over the past year, leaving more bonds to fall to more price-sensitive buyers, which can exacerbate market volatility, John Canavan, lead financial market analyst in Oxford Economics’ Macroeconomic and Investor Services group, wrote on Tuesday.

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The Treasury last week reported the fourth-highest monthly deficit in U.S. history – US$432-billion for July – as tariff refunds turned customs receipts negative for the third month in a row and outlays for Social Security and Medicare benefits for seniors continued to grow.

The deficit for the first 10 months of fiscal 2026 has already exceeded the total gap for all of fiscal 2025 with two months to go in the current fiscal year. Trump has largely ignored the dwindling number of fiscal hawks in his Republican Party, championing heavy spending across his two terms. Public debt rose by US$7.8-trillion during Trump’s first term, with more than half of it accumulating during the pandemic response over his last nine months in office.

Since Trump took office a second time in January 2025, the U.S. debt load has increased by US$3.8-trillion, for total growth of US$11.6-trillion across his two terms so far. Public debt increased by US$8.4-trillion during Biden’s term, also marked by heavy COVID-19 recovery spending, but driven as well by big-ticket outlays for infrastructure investment, clean energy subsidies and other priorities championed by his Democratic Party.

The Committee for a Responsible Federal Budget estimates that the policy choices of Trump and Biden have increased the federal debt trajectory beyond what would have accumulated under the existing spending statutes when each took office.

For instance, Trump’s landmark second-term legislative package – the One Big Beautiful Bill Act – will add another US$4.7-trillion in debt, according to the Congressional Budget Office, the non-partisan bookkeeper for federal lawmakers.

Trump has branded his second presidency as one focused on cost-cutting, marked by early federal agency job cuts ordered by the non-governmental Department of Government Efficiency. But much of his spending reductions has targeted so-called “discretionary” programs, the smallest portion of the federal budget.

The U.S. spends roughly US$7-trillion annually, and 60 per cent of it is earmarked for so-called “mandatory” programs, including payments for Social Security, Medicare, Medicaid and veterans’ care, that generally grow to keep pace with living costs.

Another US$1.1-trillion pays the interest on U.S. borrowing, the cost of which rises as the debt pile grows and as interest rates climb. The 2025 fiscal-year budget marked the first time debt service costs exceeded Pentagon funding. In the first 10 months of the 2026 fiscal year, interest costs have eclipsed Medicare health care outlays to become the second-largest line-item in the federal budget, behind the Social Security pension system.

The U.S. is spending more to fund the retirement and health care costs of the “baby boom” generation, straining the trust funds behind Social Security and Medicare even as payroll and income tax revenues fall short of covering federal costs.