The U.S. national debt has surpassed $40 trillion for the first time, raising alarms about the growing deficit as debt levels and long-term Treasury yields surge.
According to the U.S. Treasury, the total national debt reached $40.47 trillion (approximately 56.45 quadrillion won) as of September 19.
The national debt crossed the $30 trillion mark in January 2022, adding $10 trillion in just 4 years and 7 months. When President Donald Trump took office in January 2017, the debt was about $19.95 trillion, more than doubling in less than a decade.
The increase in U.S. debt has accelerated since the 2000s, driven by massive fiscal spending during the financial crisis and the COVID-19 pandemic, along with ongoing tax cuts and rising social security and healthcare costs, leading to chronic deficits.
Future fiscal burdens are also significant. The Congressional Budget Office (CBO) estimates that Trump's key tax cut and spending legislation, known as the 'One Big Beautiful Bill,' will add an additional $4.7 trillion to future deficits. The potential for increased defense spending further complicates the fiscal outlook.
Particularly concerning is the recent surge in long-term Treasury yields, which raises fears about the interest burden on the astronomically high national debt.
As the fiscal year 2026 approaches its end in about two months, the cumulative interest cost on U.S. government debt has reached $1.17 trillion, a 15% increase from the same period last year. Bloomberg reports that interest costs have become the third-largest expenditure in the federal budget, following healthcare and social security.
The problem is that as interest rates rise, the government's interest burden also increases. This growing burden can lead to larger deficits and increased bond issuance. If fiscal concerns escalate, investors may demand higher rates, creating a vicious cycle where high rates further increase interest burdens and debt levels. This phenomenon has raised fears of a 'doom loop.'
Indeed, recent long-term Treasury yields have reached their highest levels in years. On September 13, the U.S. Treasury conducted a $25 billion auction of 30-year bonds, yielding the highest rate (5.22%) since 2001. The yield on 10-year Treasury bonds auctioned on September 12 also hit its highest level since the 2007 global financial crisis.
In response to the rising long-term rates, the U.S. Treasury has intervened in the bond market. On September 19, the Treasury announced it would double the size of its buyback program for existing 10- to 30-year bonds. Following this announcement, the yield on 10-year bonds fell by about 6 basis points (1 basis point = 0.01 percentage points), while the yield on 30-year bonds dropped by about 9 basis points, indicating an immediate market reaction.
* This article has been translated by AI.
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