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How do the $40 trillion US national debt and higher bond yields impact your wallet?
The U.S. national debt has surpassed $40 trillion, leading the Treasury Department to expand a bond buyback program to address rising interest rates and economic concerns.
Supervising Producer
WASHINGTON —
The U.S. national debt has exceeded $40 trillion, prompting the Treasury Department to take action to address rising interest rates and their potential impact on borrowing costs.
Data from the Get the Facts Team shows that, in the past decade, the total national debt has grown about 112%. Since 2000, it’s grown nearly 600%.
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On Thursday, Treasury Secretary Scott Bessent announced that the administration is doubling the size of a bond buyback program from $2 billion to $4 billion to pay down the national debt faster.
“Once the market understands that we are focusing on fiscal consolidation and that we are trying to bring the market back into equilibrium in a thinly traded market, I think I’m confident that bonds will continue declining,” Bessent said.
Interest rates on government bonds have reached 20-year highs of about 4.69%, and experts say they are projected to continue climbing if no action is taken.
Rising bond yields are closely tied to interest rates for borrowers, affecting consumers seeking mortgages, credit cards, and car loans.
“Even borrowing for state and local governments who were trying to build a new school, build a new park, all of those are related to the cost of the borrowing that we have on our treasuries,” Brett Loper of the Peterson Foundation said.
Loper says the main reason why debt has accelerated so fast is because of interest.
“Something like 60 cents of every dollar that we borrow is currently going just to pay interest on the debt,” Loper said. “The increasing cost of our debt and the growing debt at the same time is really the most critical feature of why we’ve doubled from $20 to $40 trillion over the course of the last 10 years.”
The Trump administration is feeling economic pressure, especially with midterm elections approaching. Bessent said the administration plans to announce a new effort to reduce the government’s budget deficit, possibly by Monday.
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