According to the U.S. Department of the Treasury’s official Debt to the Penny website, the total public debt outstanding reached a milestone of approximately $40 trillion on Aug. 18, 2026, generating national and international headlines and renewed discussion and debate about our nation’s fiscal position and condition.
For certified public accountants (CPAs), that $40 trillion figure isn’t just a staggering number—it’s an accounting question. What exactly does that debt include, what does it leave out, and what does it reveal? The answers are more complicated—and more interesting—than headlines suggest.
The U.S. Treasury’s measure of total public debt outstanding consists of two components:
Both are included in gross federal debt. But from an accounting standpoint, they’re different.
Debt held by the public represents an obligation to creditors considered outside the federal government. Intragovernmental holdings represent obligations between federal government accounts. The federal government is, in effect, both the issuer and the holder of those securities.
That distinction matters because the statutory debt limit is tied to gross federal debt, not simply debt held by the public. The U.S. Treasury explains that gross federal debt, with certain adjustments, is subject to the statutory debt limit, which was most recently raised to $41.1 trillion in July 2025.
Therefore, the $40 trillion figure is real, but it’s not the only way to measure federal debt, and it shouldn’t be mistaken for the government’s complete financial picture.
CPAs are accustomed to asking what a reported number actually represents. The same discipline should be applied to our federal government’s finances.
Importantly, the U.S. federal government prepares consolidated financial statements in accordance with generally accepted accounting principles, based on standards established by the Federal Accounting Standards Advisory Board. The annual audited “Financial Report of the United States Government” includes accrual-based financial statements that present what the government owns; what it owes; and its revenues, costs, bottom line, sustainability measures, comprehensive footnotes, and auditor’s report.
Notably, the report presents financial results that are different from and, in some respects, more concerning than the gross national debt headline. For example, on Sept. 30, 2025—the end of fiscal year (FY) 2025 and the date covered by the federal government’s most recent published financial report—the Debt to the Penny website reported approximately $37.7 trillion of total public debt outstanding (or gross debt). That amount included approximately $30.3 trillion of debt held by the public and $7.4 trillion of intragovernmental holdings.
Yet, the government’s consolidated balance sheet reported approximately $30.3 trillion of federal debt and interest payable. Intragovernmental holdings were eliminated in the government’s consolidated financial statements, as explained in Note 12, Federal Debt and Interest Payable.
But $30.3 trillion isn’t the total of our federal government’s liabilities. Total federal liabilities were reported as $47.8 trillion, which included approximately $15.5 trillion of federal employee and veteran benefits payable and $2.0 trillion of other liabilities.
In other words, our government’s latest audited balance sheet reported approximately $17.5 trillion in liabilities beyond federal debt and interest payable. (Of course, these amounts are likely greater today.)
Importantly, these numbers aren’t contradictory. They answer different financial questions. The $40 trillion figure measures total public debt outstanding, while the balance sheet measures liabilities recognized under federal accounting standards—and neither number by itself tells the entire story of the government’s financial condition.
Of course, another important sustainability measure of the government’s long-term financial condition comes from examining its social insurance programs. According to the FY 2025 financial report, over the next 75 years, the present value of expenditures for Social Security, Medicare Parts A, B, and D, and other social insurance programs will exceed projected revenues by approximately $88.4 trillion. This isn’t additional debt—it’s a measure of the projected long-term financing gap in these social insurance programs.
For CPAs, these distinctions are fundamental.
CPAs spend their careers helping people understand financial information that can easily be misunderstood without context. For instance, CPAs know that a balance sheet is more than a single asset or liability number, and an income statement is more than a single bottom-line figure. They also know that financial condition can’t be understood by looking at any one number in isolation.
The same principle can be applied to the federal government—which is why the $40 trillion milestone deserves more attention from CPAs. It’s a wake-up call about the “unsustainable trajectory” of our national debt—a clear warning repeatedly articulated in the federal government’s financial report.
This is particularly notable because the federal government itself says the report helps all Americans better understand the government's financial position and condition.
For CPAs, the report is an opportunity to apply their professional expertise to an area of significant public interest, particularly in understanding how financial information is measured, presented, and interpreted at the federal level.
CPAs possess the training to understand accrual accounting, liabilities, financial statements, and the difference between operating results and cash flows. They’re uniquely positioned to help the public and our elected officials understand federal financial information that’s too often reduced to a single headline number.
Yet, the report remains unfamiliar to much of the public—and, arguably, too many accounting professionals. Suffice it to say, I believe it’s a missed opportunity.
To understand our federal government’s true financial position and condition, we need to examine the puzzle pieces together: gross federal debt, debt held by the public, intragovernmental holdings, total liabilities, and sustainability measures.
For CPAs, the $40 trillion milestone should be more than another large number in the news. It should be an invitation to look behind the number to better understand the nation’s financial position and condition.
No doubt, the $40 trillion headline is real, but for CPAs who are experts at solving financial puzzles, it should be the beginning of the conversation—not the end of it.
Michael G. Doorley, CPA, a financial civics advocate, is the founder of U.S. Debt Forum, which seeks to educate others on the financial position and condition of the U.S. government and national debt. He may be contacted at [email protected].
