Key facts
- Interest payments on the U.S. national debt are projected to reach $1 trillion in 2026.
- Net interest payments are projected to total $16.2 trillion over the next decade.
- Interest costs are nearing all-time highs relative to GDP and federal revenues.
- Rising interest costs threaten to crowd out other federal spending priorities.
- The U.S. Treasury is projected to pay an average of $2.8 billion per day in interest this year.
Interest costs on the U.S. national debt are escalating rapidly, driven by a combination of increasing debt levels and higher interest rates. Projections indicate that these costs will continue to rise significantly, reaching $1 trillion annually by 2026 and $2.1 trillion by 2036, according to the Congressional Budget Office (CBO).
These mounting interest payments are nearing historical highs, both in dollar terms and relative to the size of the economy (GDP) and federal revenues. By some measures, they are already surpassing levels not seen since the post-World War II period. In the current fiscal year, interest payments have become the second-largest federal spending category, trailing only Social Security.
The surge in borrowing costs is attributed to the rapid accumulation of federal debt and higher interest rates compared to previous years. This trend is expected to persist, with net interest payments projected to total $16.2 trillion over the next decade. The daily interest cost is estimated at $2.8 billion currently, with projections showing it could reach $5.9 billion per day by 2036.
These growing interest expenses pose a significant challenge to the federal budget, potentially crowding out investments in other critical areas and contributing to a cycle of higher debt. Experts suggest that policy changes are needed to put the budget on a sustainable path and control these escalating borrowing costs.