US National Debt Surpasses $40 Trillion Amid Fiscal Crisis

The United States national debt surpassed $40 trillion last month, forcing the government to spend over $1 trillion annually on debt servicing. Donald Trump and Treasury Secretary Scott Bessent have proposed a strategy to grow the economy to make the debt sustainable, though economists warn that GDP would need to triple to 6% annually to achieve this goal.

Fiscal instability is compounded by a costly war in Iran, which has pushed oil prices above $100 a barrel and increased inflation. In response, the Federal Reserve System is considering a 25-basis-point interest rate hike. Bond investors are demanding higher yields, with the 10-year Treasury yield reaching a three-year high of 4.97%. This rise persisted despite a $5.1 billion long-dated bond buyback conducted by the U.S. Treasury Department.

To incentivize voters in the upcoming midterm elections, Trump has proposed $5,000 dividend payments to every American adult if Republicans maintain Senate control. Critics and financial analysts note that such a move would add another $1 trillion to the national debt, further straining a fiscal position that Moody's Analytics has characterized as severe.