Kathmandu— The US national debt exceeded $40 trillion for the first time this week, accelerating past previous projections as federal borrowing increases due to ongoing budget deficits, growing interest costs, and significant military expenditures. The milestone was anticipated next year but arrived months earlier, with a $1 trillion increase since March alone; it took nearly 200 years for the debt to reach its first trillion in 1981. This figure equates to approximately $119,000 per person or over $366,000 per federal taxpayer and represents a doubling of the national debt since January 2017.

Rapid Debt Accumulation

The US debt has experienced unprecedented growth in recent decades. It took two centuries to reach $1 trillion in 1981, but the figure has surged in subsequent years. The total outstanding debt reached approximately $40.05 trillion as of Wednesday’s Treasury Department figures. This increase is primarily attributed to annual federal budget deficits, which occur when government spending exceeds tax revenue and other income.

Recent Spending Drivers

Much of the recent increase in national debt has occurred during the presidencies of Donald Trump and Joe Biden. Trillions were added under President Trump’s administration, and further borrowing took place under President Biden to fund Covid-19 relief measures and mitigate the economic impact of the pandemic. In addition to domestic programs, military commitments have significantly contributed to expenditures; approximately $195 billion has been spent on assistance related to the conflict in Ukraine since 2022, largely for weapons and military support.

Rising Interest Costs

The debt itself is becoming more expensive to manage. As borrowing increases and interest rates rise, annual federal interest payments have surpassed $1 trillion, making debt servicing a major expenditure for the government. Of the total $40 trillion, approximately $32.3 trillion is held by the public, while around $7.8 trillion represents obligations between federal government accounts. The majority of publicly held debt is owned domestically by entities such as pension funds, mutual funds, banks, individuals, companies and the Federal Reserve, with foreign countries like Japan, the UK, and China also holding substantial amounts of Treasury securities.

Long-Term Fiscal Challenges

Social Security, Medicare, and other mandatory programs continue to be significant drivers of federal spending. Simultaneously, tax cuts enacted by successive administrations have reduced revenue without corresponding reductions in spending, necessitating increased borrowing to cover the resulting gap. Recent reports indicate that the ongoing conflict with Iran has already cost Washington approximately $37.5 billion, with the actual costs likely much higher.

The US national debt continues to climb as a result of complex economic and political factors, presenting long-term fiscal challenges for policymakers.

(With inputs from RT)

Originally published on abcnews.com.np.