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Author: He Hao, Wall Street News
The scale of U.S. government debt in the form of national debt has exceeded US$30 trillion for the first time, more than doubling since 2018. The consequences of the huge debt borrowing during the epidemic are now emerging.
The U.S. Treasury Department’s total holdings of short-term Treasury bills, medium-term Treasury bills and long-term Treasury securities increased by about 0.7% in November to $30.2 trillion, according to data released on Thursday.Debt servicing costs are as high as $1.2 trillion.
The surge in borrowing in 2020 in response to epidemic-related expenditures, coupled with the current higher borrowing interest rates, has significantly pushed up the cost of debt interest payments of the U.S. government.Interest payments are taking up an ever-larger share of the federal budget deficit.
According to data from the Securities Industry and Financial Markets Association (SIFMA), the United States borrowed US$4.3 trillion through the issuance of Treasury bonds in 2020, and the fiscal deficit that year exceeded US$3 trillion.Although the deficit has since narrowed, recently falling to approximately $1.78 trillion in fiscal year 2025, largely due to the fiscal revenue generated by the U.S.’s increased tariffs on a number of imported goods this year, debt interest payments are as high as $1.2 trillion.
The national debt is the largest component of the U.S. national debt.As of November, the total size of the U.S. national debt was $38.4 trillion, which also includes arrears to the Social Security Trust Fund and savings bond holders.The current statutory debt ceiling is $41.1 trillion, which applies to the entire federal debt.
Guneet Dhingra, head of U.S. rates strategy at BNP Paribas, said:
The long-standing gap between U.S. government spending and revenue is the fundamental reason why the debt burden has continued to rise over the past two decades.This trend has been further amplified in the wake of the COVID-19 pandemic, as large amounts of debt have been borrowed at higher interest rates, making interest costs themselves an important factor exacerbating U.S. fiscal stress.
Citigroup rates strategist Jason Williams said:
Really the biggest challenge is interest expense.Even if tariff revenue could reach $300 billion to $400 billion, it would still be less than the interest we pay on our existing debt.We are now stuck in quicksand, and we cannot get out with tariffs alone.We were sinking just a little slower, but still sinking.
Although the auction size of U.S. medium- and long-term Treasury bonds has generally remained stable over the past two years and is not expected to change in the coming quarters, U.S. Treasury officials said last month that they had begun “preliminary consideration of the possibility of further expanding the issuance scale in the future.”
