The national debt surpassed a record $40 trillion on Wednesday, a staggering milestone as defense costs, social programs like Social Security and Medicare and interest on the burgeoning deficit make up an enormous share of federal spending.
The milestone figure was recorded just five months after the US hit a record $39 trillion debt in March. It reached $38 trillion five months before that, in October.
The unprecedented $40 trillion figure highlights competing administration priorities, from boosting defense spending that the US relies on to carry out President Donald Trump's almost-6-month-old war in Iran to lowering the cost of gas and groceries.
Kush Desai, a White House spokesman, said the Trump administration “has been focused on slashing waste, fraud, and abuse in federal spending while accelerating economic growth to get America’s debt-to-GDP ratio trending in the right direction.”
However, experts say the exploding debt and the latest record milestone are already affecting Americans' pocketbooks by raising borrowing costs for things like mortgages and cars, lowering wages from businesses that have less money available to invest, and creating more expensive goods and services.
“If we want to improve our living standards, today and for the next generation, now is the time for lawmakers to put our nation on a more affordable and sustainable path," says Michael A. Peterson, CEO of the Peter G. Peterson Foundation, a think tank focused on US fiscal challenges.
The debt has exploded over several presidential administrations, as the nation's leaders spend more money than it collects in taxes.
In recent memory, the multi-year COVID-19 pandemic shut down much of the US economy, where the federal government borrowed heavily during President Trump's first term and under former President Joe Biden to stabilize the economy and support a recovery.
More government spending was approved after Trump signed Republicans’ tax cut and spending legislation into law last year.
Advocates for a balanced budget also warn that the long-term trend of borrowing more and paying more in interest will force Americans to face tougher fiscal tradeoffs ahead.
"The federal debt is already raising the cost of living and choking out other spending and investment, threatening our economy and Americans’ long-term prosperity,” said Margaret Spellings, president and CEO of the Bipartisan Policy Center.
“Our current fiscal trajectory is plainly unsustainable, and that’s the best-case scenario. AI disruption, a recession, global war, or any number of other events could quickly push us over the edge from a challenge into a full-blown crisis," The Associated Press quoted Spellings as saying in a statement.
The US is subject to a statutory debt limit, or a limit to federal borrowing, which Congress has the authority to set, adjust or abolish.
The Bipartisan Policy Center estimates that the US will most likely reach the $41.1 trillion debt limit sometime between late winter and mid-summer of 2027, requiring Congress to again vote on whether to raise or suspend it.
The US' fiscal position stands as the worst among other developed countries, according to recent data analysis from the Organization for Economic Co-operation and Development.
