US National Debt Crosses $40 Trillion for the First Time, Raising Borrowing Cost Fears

The US total public debt outstanding surpassed $40 trillion on Tuesday for the first time in history, according to the Treasury Department, having doubled in less than a decade. Of that increase, $11.6 trillion was added across President Donald Trump's two terms and $8.4 trillion during former President Joe Biden's term. The milestone arrived months ahead of Congressional Budget Office projections, driven in part by a $432 billion federal deficit in July alone, the largest monthly shortfall since the COVID-19 pandemic, and by lost revenue linked to invalidated tariffs.

Bloomberg flagged the risk of a so-called doom loop, in which rising debt levels prompt investors to demand higher yields, which in turn raises the government's interest costs and pushes deficits even higher. Interest payments are projected to hit $1 trillion in fiscal year 2026, exceeding both defense and Medicare spending. The knock-on effects reach ordinary Americans: higher Treasury yields push up mortgage rates for homebuyers, raise the cost of student loans, and put pressure on programs such as Social Security.