The total US public debt exceeded $40 trillion, a threshold that was crossed at a faster pace than expected, government data showed on Wednesday (August 19, 2026).
This record was recorded just five months after US debt reached a record $39 trillion in March. It had reached $38 trillion five months earlier, in October.
The reasons are tangled
The increase in debt comes in light of the growing American long-term commitments, as military spending and social programs such as Social Insurance, health care, and huge loan interests to finance the budget deficit constitute a large portion of federal spending.
The accelerating rise in debt is partly due to the failure to impose tariffs after the Supreme Court overturned “Trump’s tariffs.”
After President Donald Trump, in his current term, signed the tax cuts approved by the Republican majority in Congress last year, government spending increased.
Iran war
Long-term Treasury bond yields rose on Tuesday to their highest levels since 2007, amid inflationary pressures resulting from the war in the Middle East and concerns about the US fiscal deficit. In view of this, the US government will be forced to refinance its debts at higher interest rates.
The latest figure for the US national debt shows the competing priorities of the Trump administration, from increased military spending required to continue Trump's six-month-old war against Iran to efforts to lower US fuel and food prices.
Reflections on the citizen's pocket and the "American dream"
On the other hand, experts say that the inflation of public debt and its reaching a new record level is already affecting Americans’ budgets by increasing the cost of borrowing to purchase anything such as a mortgage loan or a car loan, and it also reduces wages in companies that will have little money to invest, and raises the prices of goods and services further.
Michael A says: Peterson, CEO of the Peter J. Peterson Foundation, a think tank that focuses on the fiscal challenges facing the United States: “If we want to improve our living standards, today and for the next generation, today’s members of Congress must put our nation’s finances on a more sustainable and less costly path.”
White House spokesman Khush Desai said the Trump administration "is focused on reducing waste, fraud, and abuse of federal spending, while working to accelerate economic growth to put America's public debt ratio on track."
Obama, Trump, Biden, Trump
The US public debt has ballooned during several presidential terms as the country's leaders spend more money than they collect in revenue.
The debt currently stands at 123% of GDP, four percentage points higher than when Trump took office. The public debt ratio exceeded 100% for the first time about ten years ago. In 2007, just before the financial crisis, the percentage reached 62%, nearly half the current percentage. In the early 2000s, it hovered around 55%.
When Donald Trump first ran for president in 2016, he announced that he would zero the national debt within eight years by striking new trade agreements and promoting economic growth, but the national debt has more than doubled since then.
Not only during the era of Trump, but also during the era of Barack Obama and Joseph Biden, successive administrations accumulated a mountain of debt, whether through controversial economic stimulus measures, health care programs, military expansion, or pandemic response. In recent years, during the period of economic closure during the Corona virus pandemic, the US government borrowed heavily during the first term of President Trump and during the era of his Democratic successor, Joe Biden, to maintain the stability of the economy and support its recovery.
Advocates of balancing the budget warn that continuing the path of expanding borrowing and paying more interest on government debt will force Americans to make difficult financial decisions in the future.
'Investor anxiety'
For its part, the US Treasury sought on Wednesday to calm long-term bond markets, which led to a decline in yields. Jessica Riedel, a budget and tax researcher at the Brookings Institution, said, “The American government is following an unsustainable path with regard to the fiscal deficit,” noting that the deficit recorded by the United States has become “approximately two trillion dollars annually, even in periods of peace and prosperity.”
While financial markets previously viewed with concern a deficit ranging between three to four percent of GDP, current levels are approaching seven to eight percent, which “increases investors’ anxiety,” she added.
What about Germany?
Concern is also growing in Germany. With rising debt and interest rates, a possible credit rating downgrade, and rising government bonds, the United States is not alone in this critical situation. “We have to worry about the stability of global bond markets. The risk of a major global sovereign debt crisis is very high at the moment,” economist Gabriel Felbermeier told Handelsblatt.
Reports warn that rising interest costs threaten the United States, Japan and many European countries with a spiral of ever-increasing new debt and spiraling debt servicing costs. The International Monetary Fund also warns in its analysis of the risk of an “explosive debt trajectory.”
"Collapse is not imminent"
In the short term at least, America remains the safest haven in the world. Economists stress that there are no real alternatives to the dollar as a reserve currency. This is precisely why investors continue to buy US Treasuries, despite all the warnings.
The widely expected “regime collapse” is unlikely to be imminent. The reason is strong economic performance. As long as GDP grows, the United States can pay its debts. The situation will only be on the verge of collapse when there is an economic downturn, but this does not appear to be the case as of today, at least.
