The New York Times: Ominous Omen? US debt surged above 40 trillion US dollars, with a per capita debt of 116,000
Source: The New York Times
Compiled and organized by: bitPushNews
Original title: U.S. Debt Hits $40 Accumulated as America's Borrowing Binge Accumulated
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The size of the US federal government debt has once again broken through a historic integer point. According to data released by the US Treasury Department on the 19th, the total US debt surpassed 40 trillion US dollars for the first time, which is nearly 10 trillion US dollars more than last year's US gross domestic product (GDP), which means that every American is burdened with about 116,000 US dollars in debt.
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On Wednesday, the total amount of US Treasury bonds broke the $40 trillion mark for the first time. For the US economy, this isAn ominous milestone:For decades, the US has relied on continuous borrowing to support growing military spending, social security spending, and President Trump's tax cuts, and the fiscal base has been loosened.
This year alone, the US will need to borrow more than 2 trillion US dollars to cover various financial expenses, including military expenses for the Iran war and large-scale tax cuts passed by the Republicans in 2025. Meanwhile, interest payments to US debt holders have also risen sharply. Currently, they account for nearly half of the total deficit, further dragging the US into a fiscal quagmire.
Is this growing debt a crisis that must be addressed, or is it an alternative manifestation of America's economic strength? It's still a contentious topic. Deficits are also a battleground in a bipartisan political game — when the Republicans are in opposition, they have always been most vocal about reducing the deficit.
“The scariest part of this is that we are beginning to see signs of a spiral in debt,” Mark Godwin, senior policy director at the “Committee for Responsible Federal Budget,” which supports deficit reduction, said of interest on debt.
The inability of legislators to deal with the debt problem poses long-term risks.
Although the US remains the world's largest economy, rising debt burdens may cause investors to demand higher interest rates on US Treasury bonds or question America's credibility, which could shake people's confidence in the US dollar as the world's reserve currency.
Both Republicans and Democrats are responsible for America's debt burden. America is having to sell more and more debt to cover the costs of health-care programs, stimulus benefits, disaster relief, and day-to-day government operations.
President Trump promised to restore fiscal order, yet many of his policies have exacerbated America's financial woes.
When he first ran for president in 2016, Trump said he would eliminate the national debt within eight years by reaching a new trade deal and spurring economic growth. Since then, the national debt has doubled.
During his second term, Trump's major measures to cut spending and increase revenue were unsuccessful.
The Government Efficiency Department, initially headed by Elon Musk, promised to cut federal spending by $1 trillion. So far, the department claims to have saved just over $200 billion. The US Government Accountability Office said this month that the Government Efficiency Department's estimates lack reliability and transparency.
By imposing comprehensive tariffs on imported goods, the Trump administration has previously made progress in increasing additional government revenue. However, this year, the Supreme Court ruled that some of these tariffs were illegal, forcing the federal government to refund more than 160 billion US dollars to companies that have already paid import tariffs, causing these plans to be thwarted.
Treasury Secretary Bezent has set a goal of reducing the deficit from more than 6% of GDP when Trump took office to 3% by 2028. He admitted last week that this year's deficit situation is moving in the wrong direction.
In an interview with Newsmax, Bezent gave several reasons for the growing deficit.
He said that expenses related to the Iran war forced the US to increase military spending, and that tariff refunds weakened the Trump administration's progress in reducing the deficit as a share of GDP in 2025. The war in Iran has led to a rise in US energy prices, which has also dragged down economic growth and weakened economic expansion that Trump administration officials had hoped would increase taxes.
Bessent also said that last year's tax cuts are increasing deficits as businesses are using a provision that allows them to immediately deduct plant construction and equipment costs. According to estimates by the Congressional Joint Committee on Taxation, these measures could cost $100 billion in fiscal expenditure this year. However, the finance minister said that despite the initial costs, these tax cuts will pay off in the future through increased revenue.
“While this will currently widen the deficit, we are creating productive assets for future growth, and these assets will generate taxes in the future,” Bezent said. “I'd rather compare this to pulling out a slingshot, creating a large amount of potential energy, and then converting it into kinetic energy.”
Although he believes that the fiscal trend will stabilize, investors are demanding higher returns on holding US Treasury bonds due to concerns about the US fiscal deficit.The 30-year US Treasury yield hit its highest level in nearly 20 years this week, which means that inflation-stricken consumers and businesses will be more expensive to borrow.
When Bezent rarely interfered in the foreign exchange market to support a weak yen, some level of concern within the Trump administration was evident. The move was partly aimed at preventing Japan from selling off its holdings of US Treasury bonds to support its currency.
On Wednesday, Bezent said that the Treasury will double the size of its own debt approved for repurchase from investors in order to curb borrowing costs.
Traders in the US Treasury bond market have always taken the growing size of government debt very seriously. After all, the US debt market is the deepest and most liquid market in the world. There is no one; it sits at the core of the global financial system. In other words, as long as there are no drastic changes, there is almost no second market that can replace it, and it's not that easy to scare away buyers.
However, the undercurrent is surging, and the strings in investors' hearts are gradually tightening.
One major source of uncertainty is the Federal Reserve. It holds $6.8 trillion in government bonds and mortgage-backed securities, all of which have been saved during the past few crises to stabilize the market.
Kevin Walsh, who just took over as chairman of the Federal Reserve in May of this year, has made reducing this “family base” a top priority. However, he has yet to come up with a plan on how and how much to reduce. It is likely that he will have to wait until the end of the year — after the balance sheet review working group he is in charge of comes up with a conclusion before making a decision.
Changes in the composition of the Federal Reserve's balance sheet — that is, an increase in the share of short-term notes held by the central bank and a decrease in the share of long-term bonds — may only have a moderate impact on the market. However, the trader said,Any attempt to drastically reduce the Federal Reserve's holdings will cause greater market unease, especially if carried out through direct sell-offs.
Meanwhile, military spending and the cost of paying for programs such as Social Security, Medicare, and federal Medicaid continue to rise, and lawmakers facing elections are unwilling to go too far in aggressively pushing for spending cuts or tax increases.
“Our federal program spending far exceeds government revenue, and the largest projects in the federal budget are running automatically,” said Margaret Sperlins, chairman of the think tank's Bipartisan Policy Center.“Even in the best direction, we are only speeding down a cliff and refusing to turn.”
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