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NewsKPBS Public MediaAugust 20, 2026San Diego

U.S. federal debt reaches $40 trillion as interest costs rise

The U.S. federal debt has officially surpassed $40 trillion, with annual interest payments now ranking as the government's second-largest expense. This milestone impacts consumer borrowing costs, including mortgage and credit card rates, as the Treasury Department attempts to manage bond market volatility.

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Why It Matters

The rising national debt limits federal spending capacity and contributes to higher interest rates for everyday consumer loans like mortgages and car payments.

Key Facts

  • The U.S. federal debt has reached $40 trillion.
  • Annual interest on the debt is now the government's second-largest expense, trailing only Social Security.
  • The national debt has doubled in size since 2017.
  • The interest rate on 30-year home loans has reached approximately 6.7%.
  • Treasury Secretary Scott Bessent announced an increase in the government bond buyback program to stabilize yields.
  • Bond yields rebounded on Thursday despite the Treasury's intervention on Wednesday.
  • The Treasury previously intervened to support the Japanese yen to prevent Japan from selling U.S. Treasurys.
  • Spending growth is driven by automatic costs for Social Security and Medicare as the population ages, alongside discretionary political choices.

Who's Mentioned

organizationFreddie Mac“Source for mortgage rate data.”personScott Bessent“Treasury Secretary who announced the bond buyback program.”personCarolyn Bourdeaux“Executive director of the Concord Coalition.”personMichael Peterson“CEO of the Peter G. Peterson Foundation.”other30“Refers to 30-year Treasury bond yields and home loans.”other10“Refers to 10-year Treasury bond yields.”organizationTreasury Department“Reported the debt level and manages bond buybacks.”