According to data released by the U.S. Treasury Department release on Wednesday, the total U.S. debt has topped $40 trillion for the first time.
This latest update by the Treasury Department draws fresh warnings that a fiscal crisis is brewing as ballooning costs for social safety-net programs and interest payments far outstrip revenues held back by tax cuts.
The latest daily cash and debt balances statement showed total public debt outstanding at $40.047 trillion on Tuesday, a total that includes Treasury securities held by the public of $32.266 trillion and intra-governmental debt holdings of $7.782 trillion.
As reported, the federal government’s IOU has now more than doubled in less than a decade, from $19.95 trillion when President Donald Trump was sworn in for the first time in January 2017.
Roughly one-third of that increase occurred during two years of frantic government borrowing to fund the COVID-19 pandemic responses undertaken by Trump and former President Joe Biden, while the fiscal policy choices of both presidents combined with long-running tax-and-spending imbalances account for the rest.
As reported by the Guardian, net interest payments on the national debt have ballooned past $1 trillion annually—surpassing the country’s entire annual defense budget in recent budget cycles.
Budget groups have anticipated crossing the threshold for weeks and issued stark warnings that a full-blown debt crisis could erupt unless lawmakers confront an unsustainable fiscal outlook and raise taxes, cut spending or both.
“Forty trillion dollars 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,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget.
She said the $40 trillion figure was reached less than five months after debt reached $39 trillion, and has quadrupled in less than 20 years after taking until 1981 to reach $1 trillion for the first time.
“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,” MacGuineas said in a statement just after the Treasury data was released.
“It is staggering how predictable the fiscal decline of a global power can become,” MacGuineas added.
Financial watchdogs have warned that the milestone serves as a stark warning sign over the country’s long-term fiscal trajectory, though lawmakers remain divided on legislative steps to curb the deficit.
