Treasury says U.S. can grow its way past $40 trillion national debt milestone

WASHINGTON - Gross U.S. national debt crossed $40 trillion this week, and Treasury Secretary Scott Bessent told CNBC there is nothing magic about the number and that the country can grow its way out.

Bessent told reporters the publicly traded portion looks smaller because Social Security funds and other government entities hold a substantial share. He said he and Office of Management and Budget Director Russ Vought have been tasked with fiscal consolidation and that tariff refunds ordered after a Supreme Court ruling against emergency tariffs temporarily worsened the deficit picture.

With Section 301 tariffs, Bessent said he expects 2026 tariff income to match or exceed last year's level. He also said there is a very good chance the budget deficit under President Trump has peaked and that the deficit-to-GDP ratio fell by more than a percentage point in 2025 from the Biden-era high he described.

Vice President JD Vance told Newsmax that Bessent has a very discreet plan, supported by the president, to get the economy growing faster than the debt. Vance said that even though the debt is too high, the administration is on track on that growth test.

Treasury also said it would at least double buybacks of longer-dated securities, to at least $4 billion per operation starting in September, aiming to support liquidity in a thin summer bond market. Bessent said yields in his view do not fully reflect fundamentals.

For households on fixed incomes, the practical stakes are interest rates, inflation, and whether Washington pairs growth talk with lasting spending restraint. Round-number debt milestones grab headlines. Deficit trends and debt service costs shape what Congress can fund for seniors.