Driving the news: The U.S. national debt crossed $40 trillion for the first time this week — just five months after hitting $39 trillion in March. Treasury Secretary Bessent told CNBC's Sara Eisen on Squawk on the Street: 'There's nothing magic about the $40 trillion number. And we can grow our way out of that.'
The big picture: Bessent said the U.S. ran a fiscal consolidation in calendar year 2025, with the deficit landing around 5.7% of GDP — his framing, not a settled figure. He attributed part of the headline deficit to one-time tariff refunds and to immediate business expensing, which he called 'an investment in the future' that grows the tax base.
By the numbers: - Treasury is at least doubling buyback operations for longer-dated securities — from a max of $2B per operation to 'at least' $4B — to shore up liquidity in a bond market Bessent described as thinly traded and mispriced. Effective Sept. 9 through Nov. 4. - Interest costs have already driven the biggest jump in Treasury outlays this year — up $120 billion — with debt service now exceeding $1 trillion annually, more than national defense spending. - TBAC minutes released Aug. 5 warned that at current auction sizes, the government faces a $1.45 trillion funding shortfall in fiscal years 2027–28.
Between the lines: Jon Hilsenrath, longtime Fed watcher and founder of Serpa Pinto Advisory, told Fortune: 'Trump and a new Congress came into power and chose not to do anything about the deficit.' Bessent also teased a White House fiscal-consolidation announcement 'probably at the end of this week, beginning of next week.'
The bottom line: Bessent's growth-and-cuts pitch is coherent free-market logic — expensing factories, cutting fraud, letting capital work. But the bond market is already charging above 5% on 30-year debt, and the clock on refinancing short-term bills is ticking. Results, not rhetoric, will close that gap.