US Debt Exceeds $40 Trillion

The size of the US public debt surpassed the symbolic threshold of $40 trillion for the first time, according to data published on Wednesday by the Treasury Department, as borrowing costs rise. US Treasury debt now stands at $40.047 trillion following the latest issuance of short-term bonds on Tuesday, driven by increases in loans related to healthcare and Social Security, as well as higher interest payments. This rise occurred faster than expected, as the Congressional Budget Office had projected federal debt would reach approximately $39.4 trillion by the end of the current fiscal year.

The debt’s arrival at this level comes amid concerns about inflation, particularly stemming from the war in the Middle East and rising energy prices, which have pushed borrowing costs to levels not seen in years. Consequently, yields on long-term Treasury bonds (30-year) rose on Tuesday to their highest levels since 2007, forcing the government to spend more to refinance its debt at higher interest rates, thereby exacerbating its indebtedness.

On Wednesday, the Treasury Department intervened by announcing the largest repurchase program for long-term bonds since September, reassuring investors and helping to ease interest rate levels.