US Federal Debt Hits $40tn as Fiscal Concerns Deepen

The US federal debt has climbed above $40 trillion, reaching a new record as government spending continues to outpace revenue.

The Treasury Department reported the milestone in its daily financial update, just five months after federal debt passed $39 trillion. The government continues to accumulate debt rapidly, with annual spending exceeding revenue by more than $2 trillion.

“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 has faced additional pressure after the Supreme Court rejected many of President Trump’s tariffs, requiring the Treasury to refund more than $100 billion in import taxes collected illegally.

Government revenue has risen by 3 per cent this fiscal year, but spending has increased faster. The debt-to-GDP ratio has also worsened since Trump returned to the White House.

Meanwhile, interest payments have become a major burden, with the government spending more than $1 trillion annually to service its debt. Interest is now its second-largest expense after Social Security, while costs during the first 10 months of the fiscal year were 15 per cent higher than a year earlier.

Financial markets are also showing signs of concern. The yield on 30-year US Treasuries reached a 19-year high, pushing up borrowing costs for households and businesses. The average 30-year mortgage rate approached 6.7 per cent last week.

“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.

Carolyn Bourdeaux of Concord Action warned that neither Congress nor the president has a credible plan to slow the growth of the $40 trillion debt.

Do you think US policymakers can reverse the country’s rising debt burden?