US debt hits $40 trillion: Who does Washington owe and why does it matter?

The total debt of the United States has surpassed $40 trillion for the first time in history, according to a Department of the Treasury update on Wednesday.

Ballooning debt, especially during President Donald Trump’s second term, which began in January last year, has been raising concerns about a looming fiscal crisis for some time, with economists fearing a toxic combination of heavy borrowing, increased spending and lower taxes could land the world’s biggest economy in crisis.

Fast-rising US debt comes despite Trump’s championing of cost-cutting and efficiency as a hallmark of his second term, with the nongovernmental Department of Government Efficiency (DOGE) slashing between 250,000 and 350,000 federal jobs and cutting global aid since the start of last year.

In May 2023, the Congressional Budget Office (CBO) predicted that the US would reach the $40 trillion mark in 2028.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), a budget watchdog, said in a statement, “$40 trillion of debt doesn’t exist solely on the government’s ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another.”

Here’s what we know about why US debt is rising, and why it matters:

US debt is growing much faster in the 2020s than it did in previous decades.

Total debt, which includes debt owed to others and what the government owes itself, has doubled since January 2017, when Trump began his first term as president. US debt at the time was $19.95 trillion.