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
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High interest rates on U.S. Treasury securities increase the federal government’s borrowing costs.
How Does the United States’ Fiscal Position Compare to Other Countries’?
The United States is in a poor fiscal condition compared to the rest of the world, according to the OECD.
Top 10 Reasons Why the National Debt Matters
At $38 trillion and rising, the national debt threatens America’s economic future. Here are the top ten reasons why the national debt matters.