The U.S. national debt has crossed the $40 trillion mark for the first time, according to Treasury Department data released Wednesday, reflecting the growing pressure on the federal government as borrowing continues to outpace earlier projections.
Total public debt outstanding reached $40.05 trillion at the close of business Tuesday. The figure is higher than the Congressional Budget Office’s earlier estimate that U.S. borrowing would reach $39.4 trillion by the end of fiscal year 2026.
The milestone comes as the U.S. faces rising costs tied to Social Security, health care and interest payments on existing debt. The federal government continues to run a deficit, borrowing to cover spending on areas ranging from government programs and tax cuts to military operations.
The pace of borrowing is also coming under greater scrutiny as investors deal with inflation concerns, geopolitical tensions and uncertainty over government spending. Long-term Treasury yields rose Tuesday to their highest level since 2007, reflecting concerns about inflation and the size of the U.S. deficit.
Higher yields mean the government must pay more when it refinances existing debt, adding another layer of pressure to the federal budget. The Treasury Department moved Wednesday to calm the long-term bond market, helping push yields lower.
READ: Entrepreneur Ray Dalio warns US on rising debt crisis of $37 trillion (September 19, 2025)
Jessica Riedl, a budget and tax fellow at the Brookings Institution, said the country’s deficit trajectory has been a concern for some time.
“The United States government was on a pretty unsustainable path with deficits,” Riedl said.
She pointed out that the U.S. has been running deficits of roughly $2 trillion in recent years, even during periods of economic growth and relative stability.
Deficits that once stood at around 3% to 4% of GDP and were enough to raise concerns among financial markets have moved closer to 6% to 7% of GDP, Riedl said.
“That has made markets more nervous,” she said.
The rise in interest rates has also made servicing the national debt increasingly expensive. At the same time, an ageing population is pushing up spending on programs such as Social Security and health care, adding to the government’s long-term financial burden.
The $40 trillion figure is largely a symbolic milestone. Economists often pay closer attention to debt held by the public because it provides a clearer picture of the government’s borrowing burden on the economy.
Still, Riedl said major milestones such as the $40 trillion threshold can serve as a warning for investors.
READ: US national debt hits new high at $37 trillion (August 13, 2025)
“But psychologically, these are the landmarks that warn financial markets that they need to take another look at rising debt,” she said.
U.S. borrowing has climbed sharply during periods of economic crisis. Caleb Quakenbush, director of fiscal policy at the Bipartisan Policy Center, said federal debt increased substantially during the Great Recession and again after the government’s response to the economic disruption caused by the Covid-19 pandemic.
But he said successive administrations and Congress have yet to address the country’s spending trajectory in a way that produces a lasting solution.
The current pace of borrowing creates uncertainty for financial markets, Quakenbush said, particularly if the U.S. faces another major economic or financial crisis.
Even without such a crisis, higher government borrowing could translate into increased borrowing costs for American households and businesses, potentially putting additional pressure on economic growth.
Treasury Secretary Scott Bessent has previously set a target of bringing the U.S. budget deficit down to 3% of GDP. The latest debt figures show how difficult that goal could be as Washington continues to balance higher spending, tax policy and rising interest costs.