US Federal Debt Hits $40 Trillion

US federal debt has climbed above $40 trillion, reaching a new record as government spending continues to exceed revenue by more than $2 trillion annually.

The US federal debt crossed the milestone on Wednesday, according to the US Treasury Department’s daily financial update. The latest increase came just five months after the national debt passed $39 trillion, highlighting the speed at which the government is accumulating new obligations.

Margaret Spellings, president of the Bipartisan Policy Center, warned that the country’s current fiscal path remains unsustainable.

“Our current fiscal trajectory is plainly unsustainable, and that’s the best-case scenario,” she said. “Even in the rosiest scenarios, we’re speeding toward a cliff and refusing to turn the wheel.”

The deficit has also grown following a Supreme Court decision that struck down many of President Donald Trump’s tariffs. The ruling forced the Treasury to refund more than $100 billion in import taxes that had been collected illegally.

Government spending remains a major driver of the growing US federal debt. While government revenue has increased by 3% during the current fiscal year, spending has risen at a faster pace.

The Trump administration has blamed Democrats for the country’s worsening fiscal position. White House spokesman Kush Desai said the administration was working to reduce waste, fraud and abuse while supporting economic growth.

Despite those efforts, the debt-to-GDP ratio has deteriorated since Trump returned to the White House.

Interest payments are another growing concern. The government now spends more than $1 trillion each year servicing its debt, making interest the second-largest federal expense, behind Social Security.

During the first 10 months of the current fiscal year, interest costs were 15% higher than during the same period a year earlier. The increase reflects both the larger debt burden and higher interest rates demanded by investors.

Financial markets are also showing signs of concern. The yield on 30-year US Treasury bonds reached a 19-year high this week. Higher long-term Treasury yields can push up borrowing costs across the wider economy, including mortgage rates.

The average rate on a 30-year mortgage approached 6.7% last week, according to Freddie Mac.

Spellings said the growing debt was already affecting Americans through higher living costs and reduced room for other forms of public spending and investment.

Congress has so far shown limited appetite for tackling the problem.

Carolyn Bourdeaux, executive director of Concord Action, said the $40 trillion milestone should serve as a warning that the country needs a credible plan to control its debt.

With the US federal debt continuing to rise rapidly, how much longer can policymakers delay difficult decisions on spending and taxation?