US debt tops $40 trillion months earlier than expected

Washington’s liabilities have doubled since 2017 amid persistent deficits, crisis spending, and mounting military costs

The US national debt has surpassed $40 trillion for the first time, reaching the milestone months earlier than expected as Washington’s borrowing accelerates amid persistent deficits, rising interest costs, and military spending.

The debt was expected to reach the milestone next year, but it has jumped by $1 trillion since March. For comparison, it took nearly 200 years for total US debt to reach $1 trillion for the first time, in 1981.

Treasury Department figures released Wednesday showed total outstanding debt reaching about $40.05 trillion, equivalent to roughly $119,000 for every person in the country or more than $366,000 per federal taxpayer. The debt has doubled since January 2017, when it stood at roughly $20 trillion.

The debt is essentially the accumulated result of annual federal budget deficits. When Washington spends more than it collects in taxes and other revenue, the Treasury covers the shortfall by borrowing.

Much of the increase has accumulated under President Donald Trump’s two terms and Joe Biden’s presidency. Trillions were added during Trump’s first term and under Biden as Washington borrowed heavily to fund Covid-19 relief and cushion the economic fallout from the pandemic.

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Military commitments have added to those expenditures. Washington has reportedly spent around $195 billion in Ukraine-related assistance since the escalation of the conflict with Russia in 2022, much of it for weapons, military support and replenishing US stocks.

More recently, the US war with Iran has created another major unplanned expense. Defense Secretary Pete Hegseth said in July that the conflict had cost Washington about $37.5 billion, while the actual cost is likely to be much higher.

Social Security, Medicare and other mandatory programs remain major drivers of federal spending. Tax cuts under successive administrations have, meanwhile, reduced revenue without corresponding spending reductions, leaving Washington to finance the gap through additional borrowing.

The debt itself is also becoming increasingly expensive. As borrowing has grown and interest rates have risen, annual federal interest payments have climbed above $1 trillion, making debt servicing one of Washington’s largest expenditures.

Of the $40 trillion total, about $32.3 trillion is held by the public, while roughly $7.8 trillion represents obligations between federal government accounts. Most publicly held debt is owned domestically by pension and mutual funds, banks, individuals, companies and the Federal Reserve. Foreign countries also hold trillions in Treasury securities, with Japan, the UK and China among the largest overseas holders.