US National debt hits $40 TRILLION for first time in history

The US national debt surpassed $40 trillion for the first time in history on Wednesday, as the federal government is on pace to borrow more than $2 trillion this year alone. The debt has remained above 100 percent of the nation’s gross domestic product since the COVID-19 pandemic, which has raised concerns about the long-term consequences that come with continued borrowing.

As the world’s largest economy, the US has historically benefited from a strong demand for Treasury securities. However, continued increases in the national debt could lead investors to demand higher interest rates on US bonds. It could also raise concerns about the country’s creditworthiness and potentially threaten the dollar’s status as the world’s reserve currency.

Interest on the debt has become a significant problem in its own right. Interest payments on the federal debt have sharply risen in recent years as both outstanding debt and interest rates have increased, with interest payments outpacing defense spending.

“The scariest thing about this is how we’re starting to see the debt spiral begin,” explained Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, according to The New York Times.

President Donald Trump pledged during his first presidential campaign to eliminate the national debt through trade deals and stronger economic growth. Instead, the national debt has roughly doubled since he first took office.

During Trump’s second term, his administration initially pursued significant spending reductions through the Department of Government Efficiency (DOGE), led by Elon Musk. DOGE set a goal of identifying $1 trillion in federal spending cuts, but claimed to have identified about $200 billion. Those efforts have since diminished, as the Government Accountability Office said last month that the estimates were not reliable.

Treasury Secretary Scott Bessent has set a goal of reducing the deficit to 3 percent of GDP by 2028. Bessent explained in an interview with Newsmax that the deficit has risen due to several reasons, including the war with Iran and tariff refunds. He also said that last year’s tax cuts were adding to deficits as businesses have been taking advantage of a provision that allows them to deduct the cost of equipment and factory construction.

“That is a hit now to the deficit, but we are creating productive assets for future growth which will be paying taxes down the line,” Bessent said. “I think of that more as like pulling back a slingshot and creating a lot of potential energy that becomes kinetic.”