U.S. Debt Tops $40 Trillion as Treasury Expands Buybacks

U.S. debt topped $40 trillion on Aug. 18, 2026, according to Treasury’s “Debt to the Penny” data showing total public debt outstanding at about $40.047 trillion. Treasury under Secretary Scott Bessent has expanded long-dated buybacks to ease strains in the bond market.

U.S. Debt Surpasses $40 Trillion Amid Rising Costs

The total debt includes roughly $32.27 trillion held by the public and about $7.78 trillion in intragovernmental holdings, which represent obligations to federal trust funds. The gross federal debt now equals about 124% of U.S. GDP, the highest ratio since World War II. This milestone comes roughly 4½ years after the debt passed $30 trillion, marking more than a doubling of federal obligations in under a decade.

Rising entitlement spending on Social Security, Medicare, and other programs, along with growing interest costs on existing debt, have driven the increase. Recent war-related expenses, tax cuts, and tariff refunds also widened deficits. Net interest payments have become one of the fastest-growing federal outlays, limiting fiscal flexibility.

The Congressional Budget Office had projected gross federal debt near $39.4 trillion by the end of fiscal 2026 and expected the $40 trillion threshold in 2027. Treasury’s daily data showed about $39.99 trillion on Aug. 17, just below the milestone before it was breached the next day.

Treasury Expands Buybacks to Support Long-Dated Bonds

To address strains in the long end of the Treasury market and investor reluctance for longer maturities, the Treasury will at least double the maximum size of individual buyback operations, raising the cap from $2 billion to at least $4 billion per operation. The purchases will focus on the 10- to 20-year and 20- to 30-year sectors. Treasury described the buybacks as a liquidity tool to improve market functioning rather than a method to reduce net federal borrowing. “This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors,” the department said on Aug. 19.

Nominal Treasury yields are near two-decade highs, and market participants have reported a buyers’ strike in longer-duration Treasurys since late June, contributing to episodic illiquidity at the long end. Treasury emphasized that the expanded operations fall within its existing statutory authority and expects consistent investor participation in the targeted sectors.

Scott Bessent’s role has grown with the program. As under secretary for domestic finance, he is coordinating the expansion and has taken a more public, market-facing profile as Treasury increases active interventions to support long-dated securities.

The enlarged buyback program will begin on Sept. 9 and run through Nov. 4, providing recurring liquidity support over the autumn as maturing debt is refinanced. Treasury frames the effort as a market-structure response to long-end stress rather than a long-term fiscal solution.

Analysts say the $40 trillion milestone is largely symbolic, with no automatic statutory, contractual, or market triggers tied to the round number. They point to persistent primary deficits and rising interest costs as more significant factors for long-term fiscal sustainability. Think tanks warn that elevated debt combined with higher interest rates could constrain fiscal flexibility and increase the risk of fiscal or refinancing stress without policy changes. Some economists note that U.S. Treasurys remain the global benchmark safe asset, with little immediate funding crisis risk.