US debt hits US$40 trillion high, raising ‘doom loop’ risk

Total public debt has surged by a third in under five years, and there’s no end in sight

Total US public debt surpassed US$40 trillion for the first time, and has now surged by a third in less than five years, as US lawmakers continue to shrug off calls to contend with historically wide financial deficits.

Public debt outstanding stood at US$40.05 trillion as of the close of business on Tuesday, a US Treasury Department release on Wednesday showed. The crossing of the US$30 trillion mark only dates back to January 2022.

Republicans have long opposed revenue-raising tax increases, while both parties have been loath to sign on to politically toxic cuts to healthcare and retirement benefits for seniors. Many observers anticipate Congress and the administration of the day will only act if forced by a financial-market disruption.

That is not for lack of talk about the issue in Washington. US Treasury Secretary Scott Bessent, for one, said a key reason he got involved in politics was to help tackle deficits running at a pace unprecedented for times outside of major wars, pandemics or depressed job markets.

Yet economists, the Congressional Budget Office and Wall Street all see little or no progress in coming years for the deficit-to-gross domestic product ratio.