Gross federal debt passes $40 trillion, above CBO's $39.4 trillion forecast for the end of fiscal 2026

The fiscal year that ended Sept. 30 ran a deficit of about $2 trillion, or 6.2% of GDP, per a preliminary Committee for a Responsible Federal Budget estimate.

Gross federal debt has passed $40 trillion, Reason reported Monday, Oct. 5. In February, the Congressional Budget Office (CBO, Congress's nonpartisan budget scorekeeper) projected $39.4 trillion by the end of fiscal 2026 on Sept. 30. In 2020, CBO did not expect the debt to reach $40 trillion this decade. Interest on the debt cost a record $1.1 trillion in fiscal 2026, or 3.4% of GDP. That is more than the government spent on defense or on Medicare. What next. CBO projects gross debt reaching $43.3 trillion by the end of 2028.

Of the total, $32.3 trillion, about 100% of GDP, is held by the public: Treasury bills, notes and bonds sold to banks, pension funds, the Federal Reserve and foreign governments. The rest is owed to federal trust funds such as Social Security and Medicare, an internal IOU that does not borrow from private markets.