National debt tops $40 trillion after doubling in less than a decade, Treasury data shows

The national debt topped $40 trillion, according to Treasury Department data released on Wednesday, representing a fiscal milestone that underscores the federal government’s mounting borrowing and interest costs.  

Treasury Department data shows that the nation’s debt — which stood at around $20 trillion in 2017 — has doubled in less than a decade. The federal debt has ballooned because government spending is outstripping revenue, forcing the U.S. to borrow more money to cover the shortfall.

“We’ve been running deficits for the last 26 years, and we’ve basically ignored a lot of the structural challenges that exist in our budget that are very well known,” Michael Peterson, CEO of the nonpartisan Peter G. Peterson Foundation, told CBS News. “It’s clearly been accelerating because, like any debt problem, the longer you ignore it, the worse it gets.”

As the government continues to borrow, interest payments are consuming a larger share of the nation’s spending, creating a compounding effect that further fuels the debt. The U.S. government now spends more on servicing its debt than on national defense or Medicare.

Analysts say the nation’s debt growth isn’t likely to slow. “We’re going the wrong way,” said Dean Baker, the co-founder of the economic think tank Center for Economic and Policy Research. He cited the increase in military spending, which he said has exacerbated the country’s fiscal burden.

The Peterson Foundation estimates that the national debt could reach $50 trillion in six years if the country does not make spending or tax reforms.

What is driving up the federal debt?

Net interest costs, which approached $1 trillion in 2025 and accounted for nearly 14% of the nation’s spending, are only part of the problem. 

Several other factors have fueled the national debt, with economists holding differing opinions on the primary drivers.

The number of people collecting benefits from Social Security and Medicare has increased as the U.S. population ages, making the programs more expensive, while other spending has also increased, such as on interest payments.

At the same time, a combination of tax cuts over the last two decades has decreased the nation’s revenue. The Congressional Budget Office estimates that the Trump administration’s One Big Beautiful Bill, pblocked last year, will add $4.2 trillion to the national debt through fiscal year 2034.

While policy decisions have contributed, the debt problem can’t be tied to one specific administration, Peterson told CBS News. 

“Many administrations and many Congresses have taken steps in the wrong direction,” he told CBS News.

Larger economic crises, including the Great Recession of 2008 and the COVID-19 pandemic, have also triggered spikes in the nation’s debt, as the Treasury Department shows.

Analysts told CBS News that the rising federal debt could hinder the country’s ability to handle future economic shocks.

“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,” Margaret Spellings, president and CEO of the Bipartisan Policy Center, a Washington, D.C.-based think tank, said in an email.

What does the federal debt mean for you?

The public holds about 80% of the nation’s debt, according to the Peterson Foundation. Of that, more than two-thirds is held by domestic lenders such as mutual funds and the Federal Reserve System, while foreign investors hold the rest.

Taxpayers could also bear the brunt of rising federal debt because as the government issues more Treasury securities to fund government spending, it must offer higher yields to attract investors. That could contribute to higher interest rates for mortgages and other credit products.

“If the Treasury rate is going up, that means your mortgage rate is going up, your car loan is going up, your credit card rates are going up,” Peterson said. 

Higher interest payments can also make it more difficult for the federal government to find the money to fund core programs, a phenomenon Peterson referred to as “crowding out.” 

“It’s typically called crowding out when the interest costs represent such a big chunk of the budget that it puts downward pressure on every other program across the budget, and puts upward pressure on taxes because you know we need more money in the system to cover these interest costs,” he said.

Not everyone agrees that the nation’s soaring debt could pose an economic threat. Baker, for one, is less concerned about the consequences, noting that a strong U.S. economy should allow the federal government to continue to shoulder the growing financial burden.

The more immediate economic threats facing the U.S. are tariffs and the Iran war’s impact on prices, he said. He also warned that investors could pull their money out of the U.S. if what some believe is an artificial intelligence bubble were to burst.

“If people just become wary of U.S. markets and the U.S. economy, they might pull their money out,” he said. “So I think there is an issue with foreign money leaving the U.S. but the government debt isn’t the biggest factor, and probably not even a major factor.”