People pass by a poster showing the US national debt in Washington, DC on August 19, 2026.
Mandel Ngan | Afp | Getty Images
Government debt has eclipsed $40 trillion, passing yet another staggering benchmark for red ink, according to the Treasury Department.
The total U.S. IOU hit $40.05 trillion as of Tuesday, some four and a half years after topping $30 trillion. Years of escalating budget deficits, pushed higher by stimulus funding during the Covid pandemic, have seen the public share of the debt near 100%.
In the most recent monthly accounting of U.S. finances, Treasury reported a $432.3 billion deficit in July, the highest monthly total since March 2021. The year-to-date shortfall is nearing $1.8 trillion, higher than the same period a year ago.
Ten years ago, the debt level was at $19.4 trillion.
The U.S. fiscal situation has had market ramifications, which have played out recently and likely pushed the Treasury Department into announcing Wednesday that it is upping the size of its repurchases at the long end of the yield curve.
Treasury yields have surged since late June, hitting levels not seen since before the global financial crisis that ultimately saw the Federal Reserve take benchmark rates to near zero. The Fed also instituted an aggressive bond repurchasing program in late 2008 that helped suppress rates.
However, concerns over the debt-and-deficit situation, along with surging corporate bond issuance associated with artificial intelligence investments, rising term premia and worries over the Fed’s commitment to inflation fighting, have been a tailwind for yields.
With the Fed hesitant to move on rates absent more information on inflation and the labor market, the government has seen its borrowing costs soar. Interest on the debt has totaled nearly $1.2 trillion this year and is the largest budget expenditure outside of Social Security and Medicare.
Correction: The debt total passed $40 trillion on Tuesday. An earlier version misstated the day.