U.S. debt tops $40 trillion as CBO sees ratio reaching 120%
Treasury Secretary Scott Bessent announced Wednesday morning that the U.S. government will buy up more bonds, an intervention aimed at calming a bond market that had been moving sharply. The move steadied the market temporarily but was not described as a long-term solution.
The intervention laid bare the crosscurrents of the 2026 economy. The stock market sits near record highs, and the unemployment rate stood at 4.1% in the latest reading, but hiring has slowed, the bond market is worrisome, and budget deficits are very stretched.
The broader labor-market picture shows additional slack: the U-6 underemployment rate, which adds discouraged workers and those working part-time for economic reasons, stood at 7.9%.
The episode also carries a political dimension. Bessent has pledged to help two governments President Trump has favored — Argentina and Japan — putting political spin on fiscal policy. Last week, as the bond market came under strain, he was in Iowa with two Republicans running in tight election races, amid a stretch in which half of the president’s cabinet had visited the state.
The market strain coincides with a new milestone in federal finances. Gross U.S. debt surpassed $40 trillion for the first time, with “total public debt outstanding” reaching $40.047 trillion on Tuesday, the Treasury Department reported. The Congressional Budget Office said the U.S. debt-to-GDP ratio is widely expected to keep rising — to 120% in 10 years and 175% in 30 years.
The role’s core function, Damian Paletta, The Wall Street Journal’s Washington coverage chief, wrote in the Politics newsletter, is to keep financial markets moving smoothly and prevent fiascos, and its holder sits third in line to the presidency. Treasury secretaries have nonetheless been repeatedly pulled toward politics: John Snow traveled heavily to Ohio in 2004 to promote the economic agenda; Hank Paulson got down on a knee during the financial crisis to coax Democrats to help with a bailout; Jack Lew went to China in 2013 to meet the country’s then-new leader, Xi Jinping; and Steven Mnuchin traveled to Baden-Baden, Germany.
Getting the balance right, Paletta wrote, is easier said than done. If Bessent fails and the bond market cannot be sweet-talked, he added, the political races in Iowa will be the least of his problems.