U.S. debt balloons to more than $40-trillion after doubling under Trump, Biden
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- U.S. public debt surpassed $40.047 trillion per Treasury data, doubling from $19.95 trillion when Trump first took office in January 2017, with roughly one-third of the increase tied to COVID-era pandemic borrowing.
- Long bond yields hit their highest levels in nearly two decades as investors demanded greater compensation, days after a $25 billion 30-year Treasury auction cleared at the highest yield since 2021.
- Treasury Secretary Scott Bessent doubled buyback sizes for 10- to 30-year Treasuries to at least $4 billion per operation in a bid to push long bond yields back down.
- The July deficit of $432 billion ranked as the fourth-highest monthly deficit in U.S. history, with the first 10 months of fiscal 2026 already exceeding the entire gap for all of fiscal 2025.
- Interest costs of $1.1 trillion exceeded Pentagon funding for the first time in fiscal 2025, and have now eclipsed Medicare to become the second-largest federal line-item behind Social Security.
- Trump's One Big Beautiful Bill Act is projected by the CBO to add another $4.7 trillion in debt, even as Trump branded his second presidency as focused on cost-cutting via the Department of Government Efficiency.
- Foreign investors holding nearly one-third of all Treasuries have steadily reduced demand over the past year, leaving more bonds to price-sensitive domestic buyers, per Oxford Economics' John Canavan.
Why it matters: Interest payments now consume $1.1 trillion annually — exceeding the Pentagon budget and Medicare — meaning every additional trillion of debt diverts dollars from programs that actually need funding. Foreign holders of roughly one-third of Treasuries are quietly pulling back, leaving price-sensitive buyers to absorb new issuance and amplifying market volatility.
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