{"id":8625,"date":"2026-08-20T17:09:06","date_gmt":"2026-08-20T17:09:06","guid":{"rendered":"https:\/\/bestusamoverss.com\/?p=8625"},"modified":"2026-08-20T17:09:06","modified_gmt":"2026-08-20T17:09:06","slug":"three-things-to-know-about-the-40-trillion-federal-debt","status":"publish","type":"post","link":"https:\/\/bestusamoverss.com\/?p=8625","title":{"rendered":"Three things to know about the $40 trillion federal debt"},"content":{"rendered":"
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Planet Money<\/p>

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The Treasury Department reported this week that the U.S. federal debt had reached $40 trillion, an eye-popping level of red ink. Just the annual interest on that accumulated debt now tops a trillion dollars, making it the government’s second-biggest expense, behind only Social Security. <\/p>

Read more D.C.\u2019s IndyCar race will zoom past museums. Some worry it could harm the art inside<\/a><\/p>

Here are three things to know about the deepening financial hole the government is in.<\/p>

How did the debt get so big? <\/h3>

For years, the government has spent more money than it collects in taxes. Some of that has been driven by political choices \u2014 to wage war, cut taxes or provide a more generous social safety net during the pandemic. But much of the growth in spending happens automatically, as baby boomers age into retirement, resulting in higher costs for Social Security and Medicare. <\/p>\n

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Historically, debt as a share of the economy tended to rise during recessions, then stabilize during economic expansions. More recently, the government has run large deficits even when the economy has been growing. The debt has doubled in size since 2017. And now the people who lend money to the government are demanding higher interest rates. <\/p>

How does this affect me? <\/h3>

The federal debt affects all Americans indirectly, because it limits the government’s ability to tackle other priorities. But it also affects some people more directly, by making it more expensive to borrow money. <\/p>

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Business <\/h3>\n

More Americans are going bankrupt. What does that mean?<\/h3>\n<\/div>\n\n<\/div>\n\n<\/div>\n\n

“When the government borrows this much, and the rates for Treasurys go up, that brings up the rates for everything else, from mortgages to car loans to credit cards,” says Michael Peterson, CEO of the Peter G. Peterson Foundation, which advocates for fiscal responsibility. Mortgage rates, for example, tend to rise and fall with the yield on 10-year Treasurys, and the rate on 30-year home loans has climbed near 6.7%, according to Freddie Mac. <\/p>

Read more Disabled adults learn and work in their communities. That right is under threat<\/a><\/p>

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Is anyone in Washington working to address the debt? <\/h3>

The Treasury Department has taken steps to limit the increase in long-term bond yields. Yields fell on Wednesday after Treasury Secretary Scott Bessent announced the department would increase its buy-back program for government bonds.<\/p>

But the move does nothing to solve the underlying problem, and the effect was short-lived; The yields on 10- and 30-year Treasurys rebounded on Thursday. Earlier, the Treasury had taken steps to prop up the Japanese yen, so Japan would not be tempted to sell some of its own U.S. Treasurys. (Buying bonds pushes yields down, while selling pushes yields up.)<\/p>

Ultimately, Congress will have to raise taxes, cut spending or \u2014 most likely \u2014 do both. While some lawmakers used to proudly say they were deficit hawks, fiscal discipline has generally fallen out of favor in Washington. But anxious signals from the bond market could change that.<\/p>

“$40 trillion should be a wake-up call,” said Carolyn Bordeaux, executive director of the Concord Coalition, a deficit watchdog group. “Both parties helped bring us here, and both parties now have a responsibility to change course.”<\/p>

Read more U.S. debt tops $40 trillion. And, new census report Trump is touting raises concerns<\/a><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

The U.S. federal debt hit a record $40 trillion this week. 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