WASHINGTON
The U.S. national debt crossed $40 trillion this week, prompting Treasury Secretary Scott Bessent to argue the milestone is meaningless and that the country can "grow our way out of that."
Bessent told CNBC's Sara Eisen on Thursday that there is "nothing magic about the $40 trillion number." Treasury Department data shows the gross national debt hit $40 trillion just five months after reaching $39 trillion in March. The rapid increase has alarmed economists and contributed to a selloff in long-dated Treasury securities.
Bessent's comments followed a Treasury announcement that it would at least double the size of its buyback operations for longer-dated securities, moving from a maximum of $2 billion per operation to a minimum of $4 billion. The change takes effect Sept. 9 and will continue through Nov. 4, targeting the 10-to-20-year and 20-to-30-year sectors of the bond market, which have experienced a "buyers' strike" since late June.
Bessent described the bond market as thinly traded and mispriced. He said the Treasury intends to "make a market" in these securities, noting the buybacks "could be more than the $4 billion per issue."
The Treasury Secretary's core argument is that the deficit is smaller than headline figures suggest. He stated the United States achieved fiscal consolidation in 2025, with the deficit settling around 5.7 percent of Gross Domestic Product.
Bessent attributed part of the inflated headline deficit to one-time tariff refunds that will not recur. He projected that 2026 tariff income should approximately match 2025 levels as U.S. Trade Representative Jamieson Greer reimplements duties through the Section 301 process.
Another significant drag on revenue, according to Bessent, is the cost of allowing companies to immediately expense new factories, equipment and farm structures. Bessent considers this an "investment in the future" that increases the tax base by boosting the "after-tax return on capital."
When asked directly whether the administration believes the deficit has peaked, Bessent said there is a "very, very good chance" the worst is behind them.
Bessent pointed to a coming joint effort with OMB Director Russell Vought and a separate crackdown led by Vice President JD Vance's Fraud Task Force. These initiatives, he said, could "save several hundred billion dollars." He also teased a broader fiscal-consolidation announcement from the administration.
Vice President Vance echoed the sentiment Thursday, stating that Secretary Bessent possesses a "very discreet plan" aimed at growing the economy out of the $40 trillion debt.
