America's $40 trillion debt

**Liana Byrne** (0:01)
Washington is buying bonds, so why aren't investors buying the reassurance?

**Donald Trump** (0:05)
Two years ago, our country was dead, and now our country is the hottest country. Anywhere in the world, there's nobody close. No other country is close, and every country will admit it. And we have the best credit, and we'd pay off the debt very easily, very quickly.

**Liana Byrne** (0:18)
It's World Business Report from the BBC World Service.
I'm Liana Byrne. The cost of long-term US government borrowing is climbing again despite the Treasury stepping in, also Switzerland gets much wider access to the Chinese market, as Beijing and Byrne upgrade their free trade deal. And from pulling a sticky to stealing from work, what are the behaviors most likely to land employees in trouble with the bosses?
Yes, so the debt of the US government has hit 40 trillion dollars for the first time, more than doubling in a decade. That total figure has gone up nearly four trillion dollars during President Trump's second term alone, despite him previously promising to eliminate America's debt. The Treasury has been trying to calm nervous investors. So to explain all of this, we are joined by our business reporter in New York, Natalie Jimenez. Natalie, thanks for joining us. So how did the debt get to this level?

**Natalie Jimenez** (1:22)
Well, it's actually been a decades long build up that didn't just happen this year. It's not one single moment. In general, the MO has always been under presidents from both parties. You're going to spend more than you earn in tax revenue. That's the rule. But there have been a few events that have really bolstered it.
In the past 20 years, 2008, financial crisis, 2017, Trump's first term, tax cuts, the pandemic was won and now defense spending with the cost of the war in Iran. So it's not any single decision that got us here. It's more decade after decade under different presidents and different parties. The country has just consistently spent more than it collects.

**Liana Byrne** (2:01)
Yeah. So those are the big events, I guess. And what exactly has it been spent on?

**Natalie Jimenez** (2:07)
Well, I mean, so the point of the debt is to spend it on things like, well, first of all, any crisis or pandemic or any type of kind of project, research, education. And the main thing that it's been spent on recently is the cost of military action overseas. I mean, the estimate is $200 billion.
Also, President Trump suggested, well, we can cover that cost with tariffs, but it's just not generating enough revenue to be a solution. It's actually hundreds of billion dollars short of what was expected. So the debt itself simply is getting too large. That normal interest rate is just a lot more than they expected.

**Liana Byrne** (2:53)
It's such a huge number, isn't it, Natalie? So I'm assuming there has to be some sort of reaction to hitting that $40 trillion milestone.

**Natalie Jimenez** (3:01)
Absolutely. It's been a mix of real alarm from economists that have said that even in the rosiest of scenarios, we are currently speeding towards a cliff. And they call it a $40 trillion mark, a wake up call. But they're also pointing out that neither Congress or the president actually has a plan to deal with it. So the Treasury Department, which manages the federal finances, has been responding by increasing how much debt it buys back to help out. But Washington itself has been pretty muted. I mean, the White House has pointed mostly backwards. A spokesperson said, quote, We're focusing on slashing waste, fraud and abuse, but they're putting the blame on previous administrations. So lots of warnings from economists, but there's not really a concrete plan as of yet.

**Liana Byrne** (3:52)
All right. Natalie Jimenez in New York. Thank you so much.
Natalie actually brings me to the next point. Borrowing costs for the world's biggest economy have started rising again off the back of this, even though the Treasury has intervened. It's not necessarily given investors the reassurance that they're wanting. So here's what the president told reporters when asked about it yesterday.

**Donald Trump** (4:14)
It's a very unfair system, and I've said it now for a long time. When our country does well, interest rates should go down.
Every time I hear our country is doing well, I say, it's too bad because they lift up interest rates. They should drop interest rates because it means we have a strong country, and it's all based on credit, meaning good credit, and we have the best credit, and we'd pay off the debt very easily, very quickly.

**Liana Byrne** (4:38)