The cost of servicing US government debt has climbed to roughly $2.85 billion a day, putting net interest payments on track to hit $1.04 trillion for fiscal year 2026, according to Congressional Budget Office projections. That figure now equals about 14% of total federal spending — and exceeds what the government spends on national defense by an estimated $150 billion.
The debt itself is closing in on a symbolic threshold. Official Joint Economic Committee tracking put total gross national debt at $39.83 trillion as of August 7, up $2.88 trillion from a year earlier and growing at an average rate of roughly $7.91 billion per day. At that pace, the committee projects the US will cross $40 trillion around August 31.
A cost that's tripled since the pandemic
The scale of the increase is what stands out most. Interest payments totaled just $345 billion in 2020, meaning the annual bill has nearly tripled in six years even before accounting for further increases already baked into the CBO's forward projections. Under current law, the agency expects net interest costs to keep climbing well beyond this year, eventually reaching $2.1 trillion annually by 2036 — a trajectory that would make interest the federal government's single largest expenditure category within roughly two decades if left unaddressed.
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Rising rates raise the stakes for every borrower
The dynamic isn't unique to Washington. Elevated benchmark rates that make Treasury issuance more expensive also raise the bar for corporate borrowers: Intel's decision to raise fresh capital through a stock sale rather than debt this week reflects the same higher-rate environment squeezing large-scale capital plans across the economy. For markets more broadly, a federal government spending an ever-larger share of its budget simply to service past borrowing leaves less room for fiscal stimulus in a future downturn — a structural constraint investors have increasingly had to price into long-duration assets.
