The U.S. federal government's interest payments on the national debt rose 10.6 percent through July 2026 compared to the previous year, according to Treasury Department data, making debt service the third-largest budget item after Social Security and Medicare.
In fiscal year 2025, the U.S. paid $970 billion in interest costs alone—nearly triple the $345 billion spent in FY2020. That sum exceeded defense spending of $917 billion, Medicaid at $668 billion, and veterans' benefits at $377 billion.
The rapid accumulation of federal debt, combined with higher interest rates, has pushed borrowing costs to their highest levels in the post-World War II era. The Congressional Budget Office projects net interest payments will balloon from $1.0 trillion in 2026 to $2.1 trillion by 2036—totaling $16.2 trillion over the next decade under current law.
The growing tab leaves Washington with fewer dollars for other priorities and exposes a deeper problem: the federal government runs a primary budget deficit even before paying interest, meaning it spends more than it collects. That structural gap forces the Treasury to borrow, compounding the debt and the interest burden.
The Administration and Congress face mounting pressure to put the federal budget on a sustainable path or risk a fiscal crisis.
