Programs that millions of Americans depend on and care about may be feeling a squeeze from interest costs on our high and rising national debt.
The Congressional Budget Office (CBO) projects that interest payments will total $1,039 billion in fiscal year 2026 and rise rapidly throughout the next decade — climbing to $2.1 trillion in 2036. In total, net interest payments will total $16.2 trillion over the next decade. Relative to the size of the economy, interest costs in 2026 are projected to exceed the post-World War II high of 3.2 percent from 1991. Such costs would rise to 4.6 percent of gross domestic product (GDP) in fiscal year 2036, if current law remains the same.
The federal government already spends more on interest than on budget areas such as:
- Defense
- Medicaid
- Federal spending on children
- Income security programs, which include programs targeted to lower-income Americans such as the Supplemental Nutrition Assistance Program; earned income, child, and other tax credits
- Veterans’ benefits
In fact, Medicare (net of offsetting receipts) and Social Security are the only programs larger than net interest in 2026, and interest payments are projected to overtake Medicare (net of offsetting receipts) shortly after, in 2028. Thereafter, net interest would be the second largest expenditure by the federal government.
Looking ahead, lawmakers should chart a more stable, sustainable path for the federal budget that would alleviate the growing interest burden and help ensure that there is room in the budget for national priorities.
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Further Reading
Quarterly Treasury Refunding Statement: Higher Borrowing Compared to Last Year
Key highlights from the most recent Quarterly Refunding include an increase in anticipated borrowing of $249 billion compared to the same period in the previous year.
The Federal Government Has Borrowed Trillions. Who Owns All that Debt?
Most federal debt is owed to domestic holders, but foreign ownership is much higher now than it was about 50 years ago.
With $39 Trillion in Debt, Is the U.S. Headed for More Credit Downgrades?
Three successive downgrades of the U.S. credit rating should alarm elected leaders, but our national debt remains on an unsustainable trajectory.