US Debt Hits Record $40 Trillion, Interest Payments Exceed Defense Spending
SingTao · 3 SOURCESabout 2 hours ago2 MIN
Summary
The US federal debt reached an unprecedented $40.05 trillion on Tuesday, August 18, marking a grim milestone that has triggered global bond market turmoil. Interest expenses have now exceeded the nation's defense budget, while the Treasury scrambled to stabilize markets by doubling its long-term bond repurchase program. The debt ceiling looms at $41.1 trillion, with analysts warning the limit could be hit by mid-2027.
Key Points
- US federal debt hit $40.05 trillion ($312 trillion HKD) as of August 18, with $32.27 trillion held by the public and $7.78 trillion held internally by the government
- Annual interest payments have reached approximately $1.1 trillion ($8.6 trillion HKD), surpassing defense spending for the first time in US history
- The Treasury doubled its 10-to-30-year bond buyback program to at least $4 billion to curb rising yields, with the 10-year yield at 4.637% and 30-year at 5%
- July 2024 posted a fiscal deficit of $432.3 billion, the fourth highest in US history; year-to-date deficit stands near $1.8 trillion
- It took less than five months for debt to grow from $39 trillion to $40 trillion; debt has doubled in under a decade from $19.95 trillion in January 2017
- Trump added $11.6 trillion during his two terms while Biden added $8.4 trillion, with about one-third of increases from COVID-era borrowing
Why It Matters
Fitch estimates the debt ceiling could be reached by mid-2027, and CBO projections indicate debt will balloon to $63 trillion by 2036, potentially destabilizing global markets where US Treasuries serve as the benchmark asset .
Fitch estimates the debt ceiling could be reached by mid-2027, and CBO projections indicate debt will balloon to $63 trillion by 2036, potentially destabilizing global markets where US Treasuries serve as the benchmark asset .