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2d ago

U.S. Debt Tops $40 Trillion and Equals About 125% of GDP

Rising Treasury yields have pushed annual interest costs near $1 trillion, creating market strain that pressures lawmakers to consider higher taxes or benefit cuts.

U.S. Secretary of Commerce Howard Lutnick, U.S. Secretary of Health and Human Services Robert F. Kennedy Jr., and U.S. Center for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz stand behind U.S. President Donald Trump, as he shows a graph while delivering remarks on his administration's healthcare policies, in the Oval Office at the White House in Washington, D.C., U.S., August 31, 2026. REUTERS/Evelyn Hockstein
U.S. Treasury Secretary Scott Bessent announces a new set of sanctions against Iran, describing them as "an economic D-Day," in the Cash Room at the Treasury Department on August 24, 2026 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
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Overview

  • Earlier this month the federal debt passed $40 trillion, lifting the debt-to-GDP ratio to roughly 125 percent and marking a rapid climb over the past decade.
  • Analysts say the increase stems from decades of tax cuts, large pandemic and other stimulus spending, and rising entitlement costs such as Social Security and Medicare.
  • Markets have reacted with higher long-term Treasury yields, which have raised the government’s cost of borrowing and are feeding into higher mortgage and consumer rates.
  • Treasury Secretary Scott Bessent expanded the Treasury’s bond buyback program to temper long-term yields, but experts say the move provided only temporary relief without a fiscal plan.
  • Policymakers face hard choices — options range from raising revenue to about 20 percent of GDP, trimming spending, or reforming entitlements — yet public attention is low and major bipartisan action remains unlikely before the midterms.