US national debt exceeded the 40 trillion dollar mark for the first time. The worst-case scenario is an economic crisis
Interest payments now cost about $1.1 trillion a year, more than defence, while analysts warn unchecked borrowing could bring higher rates, austerity and risks to safety-net programmes.
Friday, 21 August 2026 10:56
The United States’ total debt surpassed $40 trillion for the first time, a Department of the Treasury update showed Wednesday. The milestone has added to concerns over a possible fiscal crisis during President Donald Trump’s second term, which began in January last year.
Economists fear heavy borrowing, increased spending and lower taxes could push the world’s largest economy into crisis, Al Jazeera reported. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said: “$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.”
The debt level arrived earlier than the Congressional Budget Office expected in May 2023, when it projected the United States would reach $40 trillion in 2028. Debt hit $39 trillion in March 2026, meaning the government added the next $1 trillion in fewer than five months. Total debt has doubled from $19.95 trillion since January 2017, when Trump began his first term.
Public debt rose by $7.8 trillion during Trump’s first term, most of it tied to the COVID-19 pandemic response, and has grown by $3.8 trillion since he returned to office in January 2025. Under the Biden administration from 2021 to 2025, debt rose by $8.4 trillion. The rise has continued despite Trump’s cost-cutting agenda, including the nongovernmental Department of Government Efficiency, which has cut between 250,000 and 350,000 federal jobs and reduced global aid since the start of last year.
Analysts cite crisis spending after the 2007-09 recession and the 2020-23 COVID-19 pandemic, along with revenues that have not kept pace with spending. The United States spends about $7 trillion annually, with about 60 percent going to Social Security payments, health insurance including Medicare and Medicaid, and veterans’ care. In July, the Treasury Department recorded $334bn in revenues and $766bn in outlays for social security, health insurance, national defence and interest payments.
Interest costs have risen after the Federal Reserve raised rates following the pandemic to fight inflation. The United States now pays about $1.1 trillion a year to service its debt, slightly more than it spends on defence, and interest costs became the second-largest spending category after pensions in the first 10 months of the 2026 budget year. The CBO estimates debt will rise from 101 percent of GDP in 2026 to 120 percent in 2036, above the previous US record of 106 percent after World War II.
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