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🇳🇬 Nigeria /Economy & Trade

US national debt exceeds $40tn, govt data shows

From The Punch · () English

Summarized and contextualized by DistantNews.

At a glance

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  • The U.S. gross national debt has surpassed $40 trillion, according to data from the Treasury Department.
  • This figure exceeds earlier forecasts and is driven by increased borrowing, growing long-term obligations, and rising interest payments.
  • The rising debt occurs amid increased borrowing costs, with long-term Treasury yields reaching their highest levels since 2007.

The United States' gross national debt has surged past $40 trillion, with total public debt outstanding reaching $40.05 trillion as of Tuesday, according to data released by the Treasury Department. This milestone significantly outstrips earlier forecasts, such as one from the Congressional Budget Office that projected overall borrowing would hit $39.4 trillion by the end of fiscal year 2026.

it’s been well known for a while that the United States government was on a pretty unsustainable path with deficits.

— Jessica RiedlJessica Riedl, a budget and tax fellow at the Brookings Institution, commenting on the U.S. debt trajectory.

The escalating debt is attributed to a combination of factors, including increased borrowing to cover government deficits, growing long-term obligations related to social security and healthcare, and a notable climb in interest payments. These rising interest payments are particularly concerning as borrowing costs have swelled. Yields on long-term Treasury bonds reached their highest level since 2007 on Tuesday, reflecting growing price pressures and anxiety over U.S. deficit spending.

Over the last few years, the United States has moved into roughly $2 trillion deficits, even during peace and prosperity.

— Jessica RiedlJessica Riedl, a budget and tax fellow at the Brookings Institution, detailing recent deficit levels.

This situation forces the U.S. government to refinance its debt at the highest rates seen since before the 2008 global financial crisis. Jessica Riedl, a budget and tax fellow at the Brookings Institution, noted that the U.S. government has been on an "unsustainable path with deficits" for some time. She pointed out that deficits have recently approached six percent to seven percent of GDP, levels that previously concerned financial markets, compared to historical levels of three percent to four percent. This sustained high deficit spending has made markets increasingly nervous.

That has made markets more nervous.

— Jessica RiedlJessica Riedl, a budget and tax fellow at the Brookings Institution, on market reactions to deficit spending.
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Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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