The US Department of the Treasury has recorded a historic milestone: the country's national debt has surpassed the $40 trillion mark for the first time in its history. The figure was recorded amid growing warnings from economists about rising fiscal risks and an unsustainable trajectory of public finances. For context: in January 2017, when Donald Trump first took the presidential oath of office, the debt stood at $19.95 trillion — meaning that in less than a decade it has more than doubled.
Structure of the Record Debt
The $40 trillion figure consists of two major components. The first is Treasury securities held by private investors, amounting to $32.266 trillion. The second is intragovernmental debt obligations totaling $7.782 trillion. This structure reflects the fact that a significant portion of the borrowing is held by both external holders and domestic institutions, including the Federal Reserve System and various funds.
How the Debt Doubled in Nine Years
Analysts highlight several key drivers of the growth. Approximately a third of the total increase came from two years of active government borrowing to finance pandemic response measures against COVID-19, carried out during the presidencies of Donald Trump and his successor Joe Biden. The remaining increases were driven by the fiscal decisions of both presidents combined with a prolonged imbalance between government spending and revenues. During Biden's term, the national debt grew by $8.4 trillion; this growth was largely explained by pandemic recovery spending, as well as large-scale expenditures on infrastructure projects, clean energy subsidies, and other Democratic Party priorities. The Committee for Responsible Federal Budget calculated that the fiscal decisions of both presidents accelerated debt accumulation compared to what existing law projected at the time they took office.
One Big Beautiful Bill Act and Further Growth
Prospects for further debt growth are tied to the sweeping legislative package One Big Beautiful Bill Act, signed by Donald Trump during his second term. According to the nonpartisan Congressional Budget Office, this package will add another $4.7 trillion to the debt. Analytical organizations tracking the state of public finances had been waiting for weeks for the $40 trillion threshold to be crossed and warned of a full-blown debt crisis if lawmakers do not pay attention to the fiscal trajectory and take action — raising taxes, cutting spending, or a combination of both. On the eve of reaching the mark, Margaret Spelling, director of the Bipartisan Policy Center, called this "somber milestone" yet another reminder of the need to address the fundamental imbalance in public finances.
Contradictory Data
There is notable disagreement among experts in assessing the actual risks. The pessimist camp, including the Committee for Responsible Federal Budget and a number of budget analysts, insists that the unsustainable fiscal trajectory poses a threat of a full-blown debt crisis and requires immediate corrective measures. The opposing, more technical view emphasizes that US debt is denominated in its own currency — the dollar — so Washington can always service it by issuing new bonds, and default is technically unlikely as long as the borrowing is denominated in the national currency. Proponents of this position point out that the debt-to-GDP ratio of 120–130% (with GDP above $29 trillion) is high but not unique: Japan holds a ratio above 250% and remains a stable economy. Thus, some analysts see a brewing crisis, others a manageable situation, and both views are present in public discourse.
Why Default Is Unlikely: The Role of the Dollar
The key factor of stability is the dollar's status as the world's main reserve currency, accounting for about 55–58% of central bank reserves worldwide. This means that demand for US Treasuries as a "safe haven" persists even as the debt grows. The bond market reacts not to the fact of the debt itself, but to expectations about the ability to service it: as long as yields do not spike sharply upward, the market does not register a crisis "here and now." This is precisely why crossing the symbolic $40 trillion threshold, despite its news resonance, is not equivalent to an automatic financial shock.
Impact on Currency Markets and the Hryvnia Exchange Rate
Against the backdrop of news about the record US debt and the dynamics of US assets, on August 20 the National Bank of Ukraine lowered the official dollar exchange rate. The NBU covers the currency shortfall in the market with its own interventions, which means the hryvnia can either weaken or strengthen depending on the situation. In addition, the NBU is introducing a new package of easing currency restrictions, which effectively means a gradual restoration of freedom of movement of private capital. For investors, this adds another factor of uncertainty: global fiscal signals from Washington now intersect with Kyiv's domestic currency policy.
