$40 trillion and counting: Why US just can't stop borrowing

It took the United States nearly two centuries to rack up its first $1 trillion in debt. The latest trillion took less than five months.On August 18, the US national debt crossed $40 trillion for the first time, reaching $40.047 trillion, according to Treasury Department data. The country had crossed the $39 trillion mark only in March.Less than a decade ago, when Donald Trump first entered the White House in January 2017, the total stood at $19.95 trillion. While the $40 trillion figure is huge, the more striking number is how quickly the US got there. It added its latest $1 trillion in less than five months.AMERICA'S DEBT PROBLEMThe US is not facing a debt problem because of one war, one president or one reckless spending spree. The $40 trillion mountain has been built over years through a combination of pandemic borrowing, tax-and-spending decisions across administrations, an ageing population and, increasingly, the rapidly rising cost of servicing the debt already on Washington's books. That last part is what makes America's fiscal problem particularly difficult. The country borrows because it spends more than it earns. But as the debt grows, so does the interest bill. And as interest costs rise, the government needs to find even more money — often through further borrowing.In other words, yesterday's debt is increasingly making tomorrow's debt more expensive. It may be noted that the $40.047 trillion total includes about $32.266 trillion in Treasury securities held by the public and $7.782 trillion in intragovernmental holdings. The total debt has more than doubled from $19.95 trillion in January 2017.The $40 trillion milestone is easier to understand when broken down by the pace of the climb. The US reached $38 trillion in October 2025. It crossed $39 trillion on March 17 this year. Five months later, it had added another trillion dollars.The pace of borrowing accelerated sharply during the Covid-19 pandemic, when Washington borrowed heavily to fund emergency relief and support the economy. Roughly a third of the increase in US debt since 2017 came during the pandemic.But when the emergency ended, the borrowing did not return to pre-pandemic levels. The debt kept climbing, driven by persistent budget deficits, rising spending and an increasingly expensive interest bill.The rest of the rise has come from persistent gaps between what Washington spends and what it collects, shaped by policy decisions under both Trump and his successor, Joe Biden.That is why the $40 trillion milestone is not really a Trump story or a Biden story. It is a story of a structural problem that successive administrations have struggled — or chosen not — to fix.The Committee for a Responsible Federal Budget noted that gross debt reached $39 trillion in March after crossing $38 trillion in October 2025. News agency Reuters reported that roughly one-third of the debt increase since 2017 occurred during pandemic-era borrowing, with longer-running tax-and-spending imbalances accounting for much of the rest.AMERICA'S SPENDING PROBLEMThe US government spends more money than it collects through taxes and other revenues. The gap between the two is called the budget deficit. To cover it, the Treasury borrows money, largely by issuing government securities. Every year's borrowing adds to the debt accumulated from previous years.Governments, of course, are not households, and borrowing is not automatically a sign of financial distress. Countries borrow to fight wars, respond to recessions, finance emergencies and invest in infrastructure. The US, with the dollar as the world's dominant reserve currency and Treasury bonds at the centre of the global financial system, has far greater borrowing capacity than most countries.But borrowing becomes a bigger problem when debt grows faster than the economy and there is no credible path to bringing the gap between spending and revenue under control.The US Government Accountability Office (GAO) has warned that, under current policy, publicly held debt is projected to grow more than twice as fast as the economy over the next decade, reaching 123% of GDP by 2036. It has called the country's fiscal path unsustainable.THE BIGGEST BILL MAY NOW BE THE DEBT ITSELFThis is where the story takes a more troubling turn. For years, the biggest pressures on the federal budget were social security, healthcare programmes such as Medicare and Medicaid, defence and other government spending.Now, interest on the national debt has emerged as one of the biggest bills Washington has to pay.The government is expected to spend around $1.1 trillion on interest this year. In fiscal 2025, net interest spending exceeded the entire federal defence budget. In the first 10 months of fiscal 2026, interest costs overtook Medicare spending to become the second-largest item in the federal budget after Social Security, according to Reuters.That means the US is increasingly spending enormous sums not on a new programme, a road, a weapon or a welfare scheme, but simply on the cost of money it borrowed in the past.And the larger the debt pile gets, the bigger that problem can become.When interest rates are high, the Treasury has to pay more to issue fresh debt and refinance maturing securities. That creates a potentially self-reinforcing loop: more debt leads to higher interest payments, higher interest payments add pressure to the budget, and persistent budget gaps require more borrowing.The GAO said net interest spending exceeded federal defence spending in fiscal 2025 and is projected to continue growing. Reuters reported that interest costs have overtaken Medicare outlays in the first 10 months of fiscal 2026.WORLD'S BIGGEST ECONOMY STILL HAS A BIG ADVANTAGEFor now, there is no immediate danger of the US suddenly running out of people willing to lend it money.The dollar remains the world's dominant reserve currency. US Treasury securities sit at the heart of the global financial system and are held by governments, central banks, banks, pension funds and investors across the world.That gives Washington a privilege few other countries enjoy: it can borrow on a scale that would be impossible for most governments.But that privilege is not a blank cheque.As debt rises, so does the risk that interest payments consume an ever-larger share of government revenue, leaving less room for other priorities. Higher Treasury yields can also feed through into wider borrowing costs, affecting everything from corporate loans to mortgages and global financial markets.The danger, then, is not necessarily that $40 trillion suddenly triggers a crisis. The danger is that the debt keeps growing until policymakers are forced to deal with it under much worse circumstances — during a recession, a war, a financial shock or another national emergency.GAO has warned that the current fiscal trajectory could reduce the government's flexibility to respond to future challenges, while fiscal watchdogs have argued that sustained action is needed before debt pressures become harder to manage.- EndsPublished By: Radhika VermaPublished On: Aug 21, 2026 10:03 IST