Kathmandu, August 21: The United States’ total government debt has exceeded $40 trillion for the first time. According to the Treasury Department, the total public debt of the U.S. government reached $40.047 trillion as of Tuesday.
Of the total debt, $32.266 trillion is Treasury debt held by the public and investors, while $7.782 trillion is debt held by government agencies.
The U.S. government’s debt has more than doubled from the $19.95 trillion recorded when Donald Trump first became president in 2017. About one-third of the increase is said to have resulted from the massive borrowing undertaken by the Trump and former President Joe Biden administrations for relief and economic programs during the COVID-19 pandemic.
The remaining increase in debt is attributed to the fiscal policies of both presidents, along with the longstanding imbalance between tax revenues and government spending.
Budget watchdog organizations have expressed concern over the growing U.S. debt, warning that failure to take immediate action could trigger a serious fiscal crisis. They have called for tax increases, cuts in government spending, or a combination of both.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the $40 trillion debt would have a direct impact on the U.S. economy and the lives of ordinary Americans.
According to her, rising debt will increase inflationary pressures, reduce the government’s ability to spend on other priorities, and weaken its capacity to respond to domestic and international crises.
Demand for U.S. debt from foreign investors has also declined over the past year. Foreign investors are estimated to hold about one-third of U.S. Treasury securities.
Meanwhile, a $25 billion auction of 30-year U.S. Treasury bonds was conducted at the highest yield since 2021. Yields on long-term U.S. government bonds reached nearly a two-decade high on Tuesday.
U.S. Treasury Secretary Scott Bessent announced Wednesday that the Treasury would double the size of its buyback operations for Treasury securities with maturities of 10 to 30 years, raising the minimum size of each transaction to $4 billion.
Higher yields on long-term government bonds generally lead to higher interest rates on mortgages, auto loans and business borrowing. Amid the rising government debt, President Trump has continued to call for interest rates to be lowered.
People’s News Monitoring Service.
Login to add a comment