U.S. National Debt Crosses $40 Trillion

The Treasury publishes a running total of the federal debt every business day, in a series it calls Debt to the Penny, and on Tuesday 18 August 2026 that total came in at just over $40 trillion, about $61 billion higher than the day before and the first reading in the history of the series above the $40 trillion mark.

The pace behind the crossing is the more useful figure, since the same series stood at just over $37 trillion a year earlier, so the debt grew by $2.90 trillion over the twelve months, which works out at a little under $8 billion a day. The round numbers now in circulation, $3 trillion and nearly $8 billion a day, are close to the record, though the first of them rounds up by about $97 billion.

Measured by milestones rather than by rates, the borrowing looks steady rather than accelerating, because the total first passed $38 trillion on 21 October 2025 and $39 trillion on 17 March 2026, which means the trillion just added took 154 days while the one before it took 147.

That total covers the whole of the debt, and it divides in two, with roughly $32 trillion held by the public, meaning the securities that investors, banks and foreign governments actually own, and the remaining $8 trillion or so owed by the Treasury to federal trust funds, an internal balance rather than money raised in the market.

One caveat on the twelve-month rate

The pace claim needs a caveat, and the caveat is visible in the same series, because between January and July 2025 the total rose by only about $44 billion, a flat stretch that had nothing to do with restraint and everything to do with the legal ceiling Congress sets on how much the government may borrow. With that ceiling binding, the Treasury went on paying the bills by shuffling money between internal accounts instead of issuing new debt, an improvisation the department calls extraordinary measures, and the borrowing that was deferred in those months showed up later as a catch-up. Any twelve-month comparison that begins inside the flat stretch will therefore overstate the underlying rate of borrowing, and the window used here begins in August 2025, once the total had already resumed climbing, so it is not inflated by that catch-up.

Interest and defense, stated on one basis

The milestone has arrived alongside a second claim, that interest now costs more than defense, and the claim is correct, although it is usually dated wrongly and almost always stated without saying which measure of interest and which measure of defense are meant, a choice that makes a material difference to the answer.

For the first ten months of the current fiscal year, October 2025 through July 2026, the Treasury's monthly spending report puts interest on the debt at about $931 billion and national defense at about $804 billion, a gap of roughly $128 billion. Both figures are drawn from the same table, cover the same period and are measured the same way, so nothing here is being compared across different bases.

Interest can also be counted before offsets, and on that basis the bill is a good deal larger, because the Treasury paid out about $1.17 trillion on its securities over the ten months, of which roughly $207 billion went to federal trust funds and so came straight back to the government. The figure used above is lower again, since it also subtracts the other interest the government collects. Counting every dollar paid out, interest ran to 1.46 times what the country spent on defense, and counting only what the government paid out net of what it received back, 1.16 times. Either way the ranking holds, which is why the imprecision has gone unchallenged.

The crossover itself did not happen this year, because on complete fiscal years interest first passed defense in fiscal 2024, by a margin of less than $8 billion, and that margin then widened to about $54 billion in fiscal 2025 and to roughly $128 billion in the first ten months of fiscal 2026, which is already more than twice the full-year figure for the year before.

Where the interest line now sits

Among the spending categories in the same table, interest was the third largest item of the first ten months of fiscal 2026, behind Social Security and Medicare but ahead of both health spending and national defense. Set against everything the government collected in taxes and other receipts over those ten months, interest absorbed about 21 cents of every dollar that came in.

Year on year, interest spending rose by about 11 percent while national defense rose by 6 percent, and the reason shows up in the two things that drive an interest bill, namely the rate and the amount borrowed. The average rate the Treasury pays across its debt edged up by less than a tenth of a percentage point, to 3.447 percent at the end of July 2026, while the debt itself grew by nearly 8 percent, so both the price and the quantity moved up and the larger move was in the quantity.

The debt grew faster than the deficit

One reconciliation is worth setting out, because the deficit and the change in the debt are often used as though they were the same number, when in fact the deficit reported for October 2025 through July 2026 came to about $1.8 trillion while the debt outstanding rose by about $2.1 trillion over those same ten months, some $335 billion more.

The government's cash position does not account for the difference, since the Treasury's main account at the Federal Reserve, which is where its day to day money sits, ended the ten months about $14 billion lighter than it began them. The explanation is that the deficit measures the taxes coming in against the spending going out, whereas the debt also moves with transactions the budget does not treat as spending at all, chief among them the accounts that finance federal direct and guaranteed loans. The monthly statement does not reconcile the two, and a reader who treats the annual change in the debt as the deficit will be wrong by a few hundred billion dollars in most years.

The next statement, covering August 2026, is the one that will show what the first month above $40 trillion cost to carry.