US national debt crosses US$40tn amid mounting fiscal pressure

US national debt has exceeded US$40 trillion for the first time, more than doubling in less than a decade as rapidly rising interest and social programme costs place increasing pressure on the federal budget.

The US Treasury Department reported on Wednesday that total public debt had reached US$40.047 trillion, equivalent to approximately 1.3 quadrillion baht.

The figure reflects mounting fiscal pressure as spending on social programmes and debt interest rises faster than government revenue, which has also been affected by tax reductions.

The Treasury’s latest daily cash and debt figures showed that the total comprised US$32.266 trillion in debt held by the public and US$7.782 trillion in intragovernmental holdings.

The current debt level is more than twice the US$19.95 trillion recorded when President Donald Trump began his first term in January 2017.

About one-third of the increase occurred during two years of accelerated government borrowing to address the Covid-19 pandemic under Trump and former president Joe Biden.

The remainder resulted from fiscal policies adopted by both administrations, alongside a longstanding imbalance between federal tax revenue and government spending.

Budget watchdogs warn of potential debt crisis

Budget watchdogs had been monitoring the approach to the US$40 trillion threshold for several weeks and warned that the United States could face a major debt crisis unless Congress addressed the country’s unsustainable fiscal trajectory.

Possible measures would include raising taxes, reducing spending or pursuing a combination of the two.

Maya MacGuineas, president of the non-partisan Committee for a Responsible Federal Budget, said US$40 trillion in debt was not merely a figure on the government’s accounts. It had consequences for the economy and would ultimately impose costs on the public.

She warned that continued borrowing could increase inflationary pressure, crowd out funding for other government priorities and leave the United States more vulnerable when responding to domestic emergencies or international uncertainty.

The national debt reached US$40 trillion less than five months after passing the US$39 trillion mark.

It has also quadrupled in less than 20 years. By comparison, the United States did not reach its first US$1 trillion in national debt until 1981.

Foreign investors grow more cautious

Concerns over the government’s borrowing requirements have also been reflected in the US Treasury market.

A US$25 billion auction of 30-year government bonds produced the highest yield for such an auction since 2021.

Long-term Treasury yields also rose on Tuesday to their highest level in almost 20 years, as investors demanded greater returns to compensate for the risks associated with the government issuing large volumes of debt.

US Treasury Secretary Scott Bessent announced that the government would increase the size of its buyback programme for Treasury securities with maturities of between 10 and 30 years to at least US$4 billion per operation.

The measure is intended to ease pressure on long-term yields and improve the functioning of the government bond market.

Foreign investors, who hold almost one-third of US government debt, have reduced their holdings over the past year.

As a result, a larger proportion of newly issued Treasury securities must be absorbed by investors who are more sensitive to price and yield changes, potentially increasing volatility in the market.

Trump legislation expected to add US$4.7tn

The Congressional Budget Office estimates that the One Big Beautiful Bill Act, a major policy initiative during Trump’s second term, will add another US$4.7 trillion to the national debt.

Although Trump has pledged that his second administration will reduce government expenditure, particularly by cutting the number of employees in federal agencies, most of the reductions have focused on discretionary programmes.

Discretionary spending represents the smallest part of the federal budget.

The United States spends approximately US$7 trillion a year, with about 60% going towards mandatory programmes such as Social Security, Medicare, Medicaid and veterans’ benefits.

These expenses tend to rise in line with the cost of living and demographic changes, making them more difficult to reduce through annual budget decisions.

Interest costs exceed defence spending

The US government is now paying approximately US$1.1 trillion a year in interest on its debt.

That burden is increasing as both the total amount borrowed and interest rates rise.

During the 2025 fiscal year, federal interest expenses exceeded the budget of the Department of Defense for the first time.

In the first 10 months of the 2026 fiscal year, interest payments also surpassed Medicare spending, becoming the federal government’s second-largest budget item after Social Security.

The fiscal pressure is intensifying as members of the Baby Boomer generation retire and require greater expenditure on pensions and healthcare.

At the same time, the Social Security and Medicare trust funds are under increasing strain because income and payroll tax revenue is insufficient to meet the federal government’s expanding long-term obligations.

Source: Reuters