National debt crosses $40 trillion and think tank warns: ‘The level of fiscal mismanagement is tragic

U.S. government debt has hit $40 trillion—an alarming milestone for economists who fear the nation’s fiscal policy is spiraling out of control.

It comes after the Congressional Budget Office (CBO) reported earlier this month that deficits are now so large that the U.S.

Treasury is paying $3 billion a day in interest, totaling $963 billion between October 2025 (when the 2026 fiscal year begins) and July 2026.

Treasury data for August 18 shows the closing balance for the day on public debt outstanding totaled $40.04 trillion.

Budget watchdogs have continually called on policymakers to get America’s fiscal house in order.

Proposals range from cutting annual federal deficits in half as a share of GDP, down from the current 6% to 3%, to calls to “cut up the credit cards” entirely .

The White House itself has indicated it recognizes a problem, with President Trump suggesting tariffs or visa policy could help plug the budget gap: So far, data suggests it won’t be enough.

With the country’s debt-to-GDP ratio now north of 120% (a metric lenders will watch when analyzing the risk premium on loans to the U.S.), debt hawks are warning the public is already paying, and is only going to start feeling the squeeze more acutely.

Michael Peterson is the chairman and CEO of the Peterson Foundation , a nonpartisan organization dedicated to putting the U.S. on a more sustainable fiscal path.

Speaking to Fortune as America hit the $40 trillion benchmark, Peterson explained that even if families don’t receive a “bill in the mail” for national debt, they’re already paying.

He explained: “When the U.S. borrows this much—and continues to borrow more and more—that drives up interest rates, which then increases household expenses because your mortgage goes up, your car loan, your credit card bills, and inflation more generally.

So [we] may not get a bill at the end of the month for national debt, but [we] are paying that bill both in the form of taxes as well as an inflated level of expenses.” While the mechanics of how debt may trickle down to individual households’ finances are complicated, voters are nevertheless expressing concern about the topic as D.C. heads into midterms.

In July, a Peterson Foundation study reported 94% of voters are more likely to support a candidate with a plan to address the debt, including 95% of Democrats, 92% of independents, and 94% of Republicans.

“To anyone who cares about America, about democracy and our future, in my view, this is already a crisis,” Peterson said, “because the level of fiscal mismanagement is tragic.