Bessent says the US can grow its way out of $40 trillion in national debt

US Treasury Secretary @SecScottBessent used a live CNBC appearance on Thursday to push back against alarm over a debt milestone that has rattled bond investors and drawn sharp criticism from economists.

"Nothing magic" about $40 trillion

The gross national debt crossed the $40 trillion mark this week, just five months after hitting $39 trillion in March. Speaking to CNBC's Sara Eisen on Squawk on the Street, Bessent sought to reframe the figure. "There's nothing magic about the $40 trillion number," he said. "And we can grow our way out of that."

Bessent said the US budget deficit under President Donald Trump has in all likelihood already crested, calling the odds "very good." He also pushed back on what he described as distorted deficit figures. "What we do want to signal is I think there's been a lot of misinformation in terms of what's going on with the deficit, what's going on with the deficit to GDP," he added.

On tariff revenue, Bessent argued that court-ordered refunds have temporarily inflated the headline deficit number. He said the tariff refunds stemmed from a Supreme Court ruling in February against President Trump's emergency tariffs, and that US Trade Representative Jamieson Greer would implement the same level of tariffs, with 2026 tariff income expected to roughly match 2025 levels.

Treasury doubles long-bond buybacks

Bessent's remarks came a day after a significant intervention in the bond market. The US Department of the Treasury announced it is increasing, by at least double, the size of liquidity support buyback operations for longer-dated nominal coupon securities, covering the 10-to-20-year and 20-to-30-year sectors. The maximum per-operation size rises from $2 billion to at least $4 billion, effective September 9, 2026, through November 4, 2026.

The announcement followed a week that saw the 30-year Treasury yield hit a 19-year high. Yields tumbled following the announcement and stock market futures surged. Bessent signalled the programme could go further, telling reporters the buyback operations "could be more than the $4 billion per issue."

Factors behind the accelerating debt load include expanded spending on the war in Iran, the One Big Beautiful Bill Act signed in 2025, rising Social Security and Medicare costs, and tariff refunds ordered after the Supreme Court struck down many of Trump's import taxes. The CBO estimates the 2025 tax legislation alone will add $4.7 trillion to the debt, according to Reuters. Whether Bessent's growth-focused optimism can counter those structural pressures remains an open question for markets.

Sources:
CNBC: Bessent says Treasury buyback operation could be more than $4 billion
US Department of the Treasury: Increased Sizes of Nominal Long-End Liquidity Support Buybacks
Quartz: Scott Bessent says US budget deficit has peaked under Trump