The United States has crossed a major financial milestone: total government debt has surpassed $40 trillion for the first time in history.

The U.S. government borrows money by selling Treasury securities. These are bought by investors and institutions around the world.

Some of the biggest foreign holders include:

• Japan: more than $1 trillion
• China: hundreds of billions of dollars
• United Kingdom: hundreds of billions of dollars
• Luxembourg: hundreds of billions of dollars
• Cayman Islands: hundreds of billions of dollars
• Canada: hundreds of billions of dollars

These countries are not simply giving money to the United States. They mainly hold U.S. Treasury securities as investments and foreign-exchange reserves. The U.S. pays interest on these securities.

However, foreign countries do not hold most U.S. debt. A large portion is held by American investors, financial institutions, the Federal Reserve and U.S. government accounts.

The debt has grown because the U.S. government has consistently spent more money than it collects in taxes. Major factors include government programs, defense spending, tax policies, emergency spending such as the COVID-19 response, and rising interest payments.

The debt has increased rapidly. It reached $39 trillion in March 2026 and crossed $40 trillion less than five months later.

The $40 trillion figure does not mean the United States is immediately going bankrupt. But economists warn that if large deficits continue, interest payments will consume more of the government's budget, leaving less money for other priorities.

The Congressional Budget Office projects that U.S. debt will continue rising relative to the size of the American economy over the next decade.

The basic problem is simple: the U.S. government keeps borrowing more money because it continues to spend more than it collects.