US national debt surpasses $40 trillion for the first time; Treasury expands long-term bond buybacks

The United States national debt has crossed the $40 trillion mark for the first time, sparking growing concerns about the nation's fiscal sustainability. The total public debt reached $40.047 trillion as of August 18, according to the U.S. Treasury Department's daily debt statement.

This dramatic increase, more than doubling since January 2017 when it stood at $19.95 trillion, is attributed to several factors. These include significant borrowing for COVID-19 pandemic responses, tax cuts enacted during the Trump administration, and escalating expenditures on social security, Medicare, and veterans' affairs. Interest costs alone have surged to approximately $1.1 trillion annually, surpassing defense spending in fiscal year 2025 and becoming the second-largest budget item after social security in the first ten months of fiscal year 2026.

The fiscal outlook is further strained by projections from the Congressional Budget Office (CBO). The CBO estimates that key tax and spending legislation from the current administration could add another $4.7 trillion to the national debt. Mandatory spending, including social security and healthcare programs, accounts for about 60% of the government's annual $7 trillion expenditure.

Market concerns are mounting as well. The yield on 30-year U.S. Treasury bonds recently hit a 19-year high of 5.34%. Foreign investor demand for U.S. debt has also declined over the past year. In response, Treasury Secretary Scott Bessent announced an expansion of the buyback program for 10-20 year and 20-30 year Treasury bonds. The size of these buybacks will double, from a maximum of $2 billion to a minimum of $4 billion per auction, to help curb rising long-term interest rates and support market liquidity. These expanded measures are set to run from September 9 to November 4.