U.S. Debt Hits $40 Trillion, Raising Fresh Concerns Over America's Fiscal Future

It took almost 200 years for US national debt to reach $1 trillion for the first time, Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), told BBC News.

US national debt has surpassed $40 trillion, highlighting growing concerns about federal borrowing, interest costs and America's long-term fiscal outlook.

That milestone, reached in 1981, was treated as a wake-up call. President Ronald Reagan subsequently warned Americans about the country's fiscal trajectory, Michael Race reported for BBC News.

The US national debt has now passed the $40 trillion mark, another major milestone that has renewed concerns about the country's long-term fiscal position.

The increase reflects years of government spending exceeding tax revenue, with borrowing also rising sharply during the 2008 financial crisis and the COVID-19 pandemic.

More recently, higher interest rates have increased the government's cost of servicing its debt.

The debt milestone was expected, but its scale underscores the growing challenge facing policymakers.

Spending on Social Security, Medicare and other programs continues to put pressure on the federal budget, while tax revenues have not kept pace with government expenditures.

At the beginning of Trump's first presidential term in 2017, US national debt was just under $20 trillion. It has since more than doubled.

The debt is increasing by roughly $90,000 per second, or about $7.8 billion a day, according to figures cited by the BBC from the Congressional Joint Economic Committee.

The rising debt is also affecting financial markets. Long-term Treasury yields have climbed as investors demand greater returns amid concerns over government borrowing, inflation and the supply of new debt.

Heavy borrowing by technology companies to finance artificial-intelligence investments has added to competition for capital.

The US is approaching its $41.1 trillion debt ceiling, while the Congressional Budget Office projects that federal debt could reach roughly $64 trillion by 2036.

Economists warn that the situation is serious, although they say the United States retains advantages because of the size of its economy and the dollar's role as the world's primary reserve currency.

Higher government borrowing costs can ultimately affect households through higher mortgage, car-loan and credit-card rates. Economists also warn that rising interest costs could reduce the government's flexibility to respond to future economic shocks.