Total U.S. debt has topped $40 trillion for the first time, the Treasury Department said on Wednesday (August 19), drawing fresh warnings that a fiscal crisis is brewing as ballooning costs for social safety-net programs and interest payments far outstrip revenues held back by tax cuts.
The Treasury's latest daily cash and debt balances statement showed total public debt outstanding at $40.047 trillion on Tuesday, a total that includes Treasury securities held by the public of $32.266 trillion and intra-governmental debt holdings of $7.782 trillion.
Michael Peterson, chairman and CEO of the Peter G. Peterson Foundation, attributed the growing debt partly to an aging population, rising healthcare costs and tax policies that do not generate enough revenue to meet federal spending commitments.
"Interest is our fastest-growing government program," Peterson said, adding that the government spends more than $3 billion a day on interest and will spend $16 trillion over the next decade.
Debt service costs exceeded Pentagon spending for the first time in fiscal 2025. In the first 10 months of fiscal 2026, interest costs surpassed Medicare spending to become the second-largest federal budget item after Social Security.
Peterson said the government would need to refinance about $13 trillion in Treasuries over the next year, including about $2 trillion in new borrowing to fund the deficit. He said heavy government borrowing contributed to higher mortgage, car loan and credit card rates.
"If you care about affordability, you should be all over your representative in Washington to start to address this problem," Peterson said.
He said lawmakers could reduce the deficit gradually through a combination of tax and spending changes without immediately balancing the federal budget.
"You don't have to implement immediate, draconian, huge changes immediately," Peterson said. "If you set the country on the right course, the financial markets will respond well."
Peterson said more than 200 potential policy changes had been proposed by think tanks from across the political spectrum.
"It's just a matter of the political courage and political will to get things started," he said.
Posted by: AAngeles/NET25 News
