US national debt blows past $40 trillion for first time

By SUZANNE DOWNING

Aug. 19, 2026 – The national debt has surpassed $40 trillion for the first time in the nation’s history.

The federal government’s Total Public Debt Outstanding reached approximately $40.05 trillion on Tuesday, Aug. 18, according to the US Treasury Department’s daily Debt to the Penny accounting.

That works out to roughly $117,000 for every man, woman, and child in the country.

The milestone represents the cumulative amount the federal government has borrowed over generations after spending more than it collected in taxes and other revenue. The debt stood at approximately $20 trillion in early 2017. It has doubled in less than a decade under the Trump and Biden administrations.

For perspective, it took the federal government more than two centuries to accumulate its first $20 trillion in debt. It needed less than 10 years to add the next $20 trillion.

Debt held by the public is generally considered the more economically significant figure because it represents borrowing from financial markets. The Congressional Budget Office estimates that publicly held debt will equal approximately 101% of the nation’s gross domestic product by the end of fiscal year 2026.

The previous record for publicly held debt as a percentage of the economy was 106% in 1946, immediately following World War II. The Congressional Budget Office projects the country will break that record by 2030 and reach 120% of GDP by 2036 if current policies remain in place.

The red ink continues to pile up despite relatively low unemployment and the absence of a recession. These were economic conditions during which the federal government historically has run much smaller deficits.

The Treasury Department reported a $432 billion deficit in July alone, the largest July shortfall on record and the highest monthly deficit since March 2021. Washington collected approximately $334 billion during the month while spending about $766 billion.

The federal government’s deficit reached $1.799 trillion during the first 10 months of fiscal year 2026, already exceeding the entire fiscal year 2025 deficit with two months remaining. Budget analysts now expect the annual shortfall to approach or exceed $2 trillion.

Persistent deficits have accumulated under Republican and Democratic administrations alike. The causes include the financial crisis and recession of 2008, tax and spending decisions, wars, trillions of dollars in emergency spending during the Covid pandemic, the expanding cost of Social Security and Medicare, and rapidly rising interest payments.

Interest on the debt has become one of Washington’s largest expenses.

CBO projects net interest spending will exceed $1 trillion during fiscal year 2026, up from approximately $970 billion last year. That is more than the federal government spends on national defense and more than it spends on nearly every individual federal program other than Social Security and Medicare.

The average interest rate on publicly held federal debt is estimated at approximately 3.4% this year. As older debt matures and is refinanced, CBO expects the average rate to rise to approximately 3.9% later in the next decade.

Even small increases in borrowing costs become enormously expensive when applied to tens of trillions of dollars. Interest payments are projected to climb to $2.1 trillion annually by 2036, consuming nearly one-fifth of all federal spending.

Most publicly held US debt is owned domestically. CBO estimated that American entities held roughly 70% of the publicly held debt as of late 2025, with foreign investors accounting for about 30%. The Federal Reserve, mutual funds and financial institutions are among the largest domestic holders.

Japan remains the largest foreign holder, followed by the United Kingdom. China’s holdings have fallen considerably from their previous peak and now account for only a small percentage of total US debt.

The dollar’s role as the world’s principal reserve currency helps maintain demand for Treasury securities and allows the United States to borrow at rates many other countries could not obtain. But the government must continually attract buyers willing to finance new spending and refinance trillions of dollars of maturing obligations.

The $40 trillion milestone comes as the nation approaches another fight over its statutory debt ceiling, currently set at $41.1 trillion. Faster-than-anticipated borrowing could push the government against that limit sometime in 2027 unless Congress raises or suspends it again.