The gross national debt of the United States officially reached $40 trillion for the first time in history this week, according to the US Treasury, and the bill keeps climbing while the government spends more than it earns on defence, Social Security and interest on the debt. Interest alone now costs more than $1 trillion a year. That’s not a bookkeeping quirk. It’s a state that borrows to keep itself running, then hands a growing chunk of public money to creditors.
The debt crossed the $40 trillion threshold after adding $1 trillion in just five months. Dan Coatsworth, head of markets at AJ Bell, said the total is equivalent to what an average US worker would earn in 615 million years. He added, "Based on average salaries, it would take a US worker more than 615 million years to earn the equivalent of America’s $40 trillion national debt, which itself has doubled in a decade." The scale is absurd on purpose. The state can move numbers this big because ordinary people can’t.
Who Gets Paid First
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." She warned that "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." That’s the language of the budget priesthood, but the mechanics are plain enough: debt service comes before almost everything else, and the public pays through prices, cuts and taxes.
The IMF projects that US general government gross debt will reach $40.7 trillion in 2026, compared with a nominal GDP of $32.4 trillion. That would put debt at 125.8% of GDP, up from 103.7% in 2012, according to the IMF’s April 2026 World Economic Outlook database. Gross debt reached its previous milestone of $39 trillion in March 2026, less than five months ago. MacGuineas said the gross national debt has doubled in the last ten years and quadrupled in less than twenty years, and that it took nearly 200 years for America’s gross debt to reach $1 trillion for the first time in 1981. She also quoted President Reagan's televised warning: "If we as a nation needed a warning, let that be it." The warning didn’t stop anything. The debt kept moving.
The Creditors’ Share
The $40 trillion figure, known as gross federal debt, includes debt held by the public and debt held by the government itself, known as intragovernmental debt. It does not include debts carried by state and local governments or personal debt owed by individuals. Debt held by the public is the portion owed to investors outside the federal government, including individuals, banks, pension and mutual funds, foreign investors, state and local governments and the Federal Reserve. It is the largest component of the total, standing at more than $32 trillion, according to the Committee for a Responsible Federal Budget.
MacGuineas said the debt held by the public recently exceeded the size of the economy, the deficit-to-GDP ratio is running twice as high as where it should be, and interest costs exceed the national defence budget. Most US government debt is held domestically. Those investors include the Federal Reserve and government accounts, US banks, pension and mutual funds, insurance companies, state and local governments, households and other investors. Together, they held about 76% of federal debt at the end of June 2026, according to the US Treasury. Foreign and international investors were the next-largest group, holding $9.27 trillion, or 24.1%, in June 2026. Japan held $1.12 trillion in Treasury securities in June 2026, accounting for 12% of foreign holdings. Countries outside the 20 largest foreign holders accounted for a combined 19.9%.
The government borrows because it spends more than it collects. The federal budget deficit is projected to reach $1.9 trillion in 2026, equivalent to 5.8% of GDP. An August update shows the deficit had already reached $1.8 trillion in the first 10 months of fiscal 2026, which runs from 1 October 2025 to 30 September 2026. The Congressional Budget Office expects federal expenditure, including defence, Social Security and net interest, to total about $7.4 trillion in the 2026 fiscal year, compared with revenues of $5.6 trillion. Total spending includes $1.67 trillion for Social Security, about $1.9 trillion for major healthcare programmes, $918 billion for defence, $1.04 trillion for net interest and approximately $1.9 trillion for all other federal programmes.
The Fiscal Machine Keeps Rolling
The CBO warned in February 2026 that the US fiscal trajectory is unsustainable, as persistent deficits push debt and interest costs higher. According to its forecast, gross federal debt will reach approximately $64 trillion by the end of 2036. This week, government debt, inflation concerns and geopolitical risks helped push long-term Treasury yields to multi-year highs. The 30-year yield reached almost 5.34% on Tuesday, its highest level since 2007, before falling after the Treasury expanded its bond buybacks.
JPMorgan strategists Jay Barry and Jason Hunter told MarketWatch that the move only addresses the symptoms, rather than the root cause of a budget deficit equivalent to about 6% of GDP, and warned that without "real fiscal consolidation" markets could "view this action as lacking credibility." The Committee for a Responsible Federal Budget called for drastic measures, including committing to "No New Borrowing" and targeting a deficit of 3% of GDP, which it said already has bipartisan support. MacGuineas said, "Whatever motivation our elected officials need to find to finally take action — whether the worries of their constituents back home, the alarm signalled by financial markets, competition from abroad, or the consequences of failing to act — they ought to find it soon. No one knows how many more of these milestones America can take." The milestone came and went. The debt machine didn’t.