The United States currently spends almost $970 billion annually solely on servicing the interest of its $38.8 trillion national debt—a sum that’s nearly three times what it was in 2020 and already outpaces federal spending on national defense or Medicaid, per a February analysis from the (CRFB).
For most Americans, this number barely makes an impression. But budget experts caution it’s one of the most impactful—yet least talked about—fiscal crises in the nation’s history.
This rapid increase didn’t occur suddenly. Interest costs have spiked from a combination of two factors: the federal debt has swelled by trillions, and interest rates rose sharply from their near-zero post-pandemic lows. As a percentage of the economy, interest costs have doubled from 1.6% of GDP in 2021 to a record 3.2% in 2025. Currently, the government spends more on debt interest than on Medicaid or the entire national defense budget—programs that Americans feel deeply about and debate politically. Yet the interest expense garners relatively little public anger.
The $2 Trillion Threshold
The future numbers are even more alarming. Per the Congressional Budget Office’s (CBO) latest baseline projection, net interest costs are expected to more than double once more—from $970 billion in fiscal year 2025 to $2.1 trillion by 2036.
From now until 2036, publicly held debt is anticipated to rise by 86%, adding about $26 trillion, while the average interest rate on that debt will increase by another 0.5 percentage points. Combined, these factors will push interest costs up by 121%.
By 2036, interest payments will eat up a quarter of all federal revenue, up from around one-fifth today and just one-tenth in 2021. To put it simply: for every four dollars the U.S. takes in via taxes, one will go solely to paying creditors—nothing to roads, veterans, or schools.
When Medicare Is Surpassed
Currently, interest spending is roughly on par with Medicare—one of the most popular and politically protected programs in the federal budget. The CBO forecasts that by 2029, net interest costs will formally overtake Medicare, making it the second-largest government program, behind only Social Security. That milestone is fewer than four years away.
This trend doesn’t end there. By 2047, the CBO projects interest costs will even outpace Social Security spending, rising to become the single biggest expense in the entire federal budget—surpassing retirement income, senior health care, and the military.
A Crowding-Out Crisis
The impacts go beyond just numbers. As interest costs grow, they push out nearly every other national priority. The CRFB estimates that rising interest costs will make up 28% of all nominal spending growth over the next decade and 120% of spending growth as a share of GDP—meaning other programs will essentially shrink in relative terms to accommodate this.
As of February, the national debt is approximately $38.77 trillion, increasing by roughly $6.43 billion each day. At this rate, the U.S. is expected to reach $39 trillion around April.
The CRFB and other fiscal watchdog groups maintain that a credible deficit reduction plan is the only feasible way out—one that would put the debt on a sustainable track, reduce pressure on interest rates, and stop the interest bill from eventually consuming the entire budget. To date, Washington has yet to create such a plan.
For this story, journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.