American public debt has reached 40 trillion dollars. Last night it officially surpassed the symbolic threshold of Forty Trillion, equal to 124% of GDP, months ahead of the already worrying forecasts of the Congressional Budget Office. A sharp acceleration that has also alarmed the Donald Trump administration: the Treasury rushed to take action and announced the doubling of buybacks of the longest maturity securities (the most strained, with thirty-year yields at their highest in nearly twenty years), quickly revising a schedule of operations announced just weeks ago.
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The mountain of debt amounts to $117,161 for each American and forces the government to pay up to $1.4 trillion in interest annually: more than the entire Pentagon budget. But the stakes are much higher. Interest expenses take away resources needed for other economic strategies. High yields, especially in times of crisis, worsen the finances of families and businesses by providing benchmarks that are difficult to sustain for credit access. But more than anything else, high debt and peak yields call into question the solidity of U.S. leadership.
There are specific reasons for the new national debt surge, composed of over $32 trillion in securities held by investors and foreign governments (equal to 101% of GDP) and nearly $8 trillion from government entities. Today, lower revenues from trade tariffs weigh heavily: the Supreme Court ruling that rejected Trump removed $2 trillion in revenue from the budget. A blow that added to more structural and deep reasons: from extraordinary expenses inherited from recessions and the pandemic; to large uncovered tax breaks (the Trump tax reform One Big Beautiful Bill creates a $2.4 trillion hole over ten years); to the aging population with higher costs for healthcare and pensions.
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Complicating everything is the competition for Treasury securities from the avalanche of debt issued or being issued by Big Tech to finance mega AI projects. A greater hunger than admitted: off-balance-sheet, thanks to accounting maneuvers analyzed by the Wall Street Journal, these giants have accumulated $3 trillion in debt, triple the amount recognized and double the estimate from three months ago.
“Debt is in constant and rapid growth, there is an urgent need for a historic adjustment, on spending and taxation levels,” explain analysts from the Institute for Economic Policy Research at Stanford. Six months ago, the Congressional Budget Office had forecast it would reach $39.4 trillion in the current fiscal year. Two days ago, the Treasury instead announced that “debt has exceeded $39.9 trillion” and is continuously growing.
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