WASHINGTON — The United States national debt crossed $40 trillion in June, a threshold that has transformed what was once a perennial Washington talking point into a genuine source of concern among mainstream economists and institutional investors. The escalation has been dramatic: the debt was $20 trillion in 2017, $30 trillion in 2022, and has added $10 trillion in just four years. More significant than the headline number is the cost of servicing that debt.

Annual interest payments on the federal debt reached $1.52 trillion in fiscal year 2026, exceeding both the entire defense budget ($895 billion) and Medicare ($920 billion). Interest is now the second-largest category of federal spending after Social Security. Even with the Federal Reserve's recent rate cuts, the average interest rate on outstanding Treasury debt — which has risen from 1.8% in 2021 to 3.4% in 2026 as older low-rate debt matures and is refinanced at higher rates — means interest costs will continue rising in absolute terms for years.

The Congressional Budget Office's long-term outlook projects that under current law, debt held by the public will reach 135% of GDP by 2035 and 185% by 2050. No major economy has sustained debt-to-GDP ratios above 150% without experiencing a fiscal crisis or currency devaluation. "We are not Japan," warned former Treasury Secretary Lawrence Summers. "The United States does not have a captive domestic savings pool that will absorb unlimited government debt at low rates indefinitely." The political system has shown no appetite for the combination of spending cuts and tax increases that fiscal stabilization would require.