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US debt tops $40 trillion, sparking fiscal crisis fears
🇬🇷 Greece /Economy & Trade

US debt tops $40 trillion, sparking fiscal crisis fears

From Ta Nea · () Greek

Translated from Greek, summarized and contextualized by DistantNews.

At a glance

News Official statement Context piece
  • The U.S. national debt surpassed $40 trillion for the first time, raising concerns about a fiscal crisis.
  • The federal debt has more than doubled in less than a decade, with significant increases during the COVID-19 pandemic response.
  • Budget watchdog groups warn of a potential debt crisis if lawmakers do not address unsustainable fiscal policies.

The United States' national debt has crossed the $40 trillion mark, a sobering milestone that has prompted renewed warnings of an impending fiscal crisis. Rising costs for social programs and interest payments are significantly outpacing government revenue, which is further constrained by tax cuts.

This grim milestone is a reminder that it is time to address a fundamental mismatch.

— Margaret SpellingsMargaret Spellings, CEO of the Bipartisan Policy Center, commented on the national debt surpassing $40 trillion.

The total public debt reached $40.047 trillion as of Tuesday, according to the Treasury Department. This figure includes $32.266 trillion in government bonds held by the public and $7.782 trillion in intragovernmental debt. The federal debt has more than doubled since January 2017, when President Donald Trump took office. Roughly one-third of this increase occurred during the intensive government borrowing periods under Trump and President Joe Biden to fund the COVID-19 pandemic response.

Budget watchdog groups had predicted this threshold would be crossed, issuing stark warnings that a full-blown debt crisis could erupt if lawmakers fail to confront the unsustainable fiscal future. They advocate for increasing taxes, reducing spending, or both. "This grim milestone is a reminder that it is time to address a fundamental mismatch," said Margaret Spellings, CEO of the Bipartisan Policy Center, last week. "Federal programs are spending far more than the government takes in, and the biggest budget items run on autopilot." She added that the federal debt is already increasing the cost of living and limiting other spending and investments, threatening the economy and the long-term well-being of Americans.

Federal programs are spending far more than the government takes in, and the biggest budget items run on autopilot.

— Margaret SpellingsMargaret Spellings, CEO of the Bipartisan Policy Center, explained the fiscal imbalance.

Global creditors are showing signs of increased caution. Following a recent auction of 25-year bonds with the highest yield since 2021, yields on "long bonds" have climbed to near two-decade highs, as investors demand greater returns due to the large volume of government debt being issued. In response, U.S. Treasury Secretary Scott Bessent announced on Wednesday the doubling of repurchase sizes for 10- to 30-year bonds, aiming to push down yields. The demand for U.S. debt from foreign investors, who hold nearly a third of the bonds, has also decreased over the past year.

The federal debt is already increasing the cost of living and limiting other spending and investments, threatening the economy and the long-term well-being of Americans.

— Margaret SpellingsMargaret Spellings, CEO of the Bipartisan Policy Center, described the consequences of the national debt.
DistantNews Editorial

Originally published by Ta Nea in Greek. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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