The U.S. government is now spending more to service its debt than at any point in more than three decades. Total national debt has crossed $40 trillion, and annual interest payments have reached $1.25 trillion, a sum larger than the country's entire 2026 defense budget.
Net interest payments consumed 18.5% of federal revenue in 2025, edging past the previous high of 18.4% set back in 1991. The comparison hides a much bigger shift underneath it. Publicly held debt has grown to more than $32 trillion, over 100% of GDP, compared with just 44% of GDP in 1991.
The Congressional Budget Office expects the burden to keep growing, projecting that interest costs will climb to 25% of federal revenue by 2036. Interest expense as a share of revenue has already tripled since 2015.
Part of the pressure is coming from competition inside the bond market itself. Tech companies issued $225 billion in bonds during the first half of 2026 alone, much of it to fund AI infrastructure buildouts, adding to overall demand for capital and pushing up the yields the government has to offer investors to keep buying its own debt.
Treasury Secretary Scott Bessent has responded by doubling the size of the Treasury's bond buyback operations, from $2 billion to $4 billion per transaction, an effort to manage the government's debt load and support liquidity in the market.
Analysts at Doubleline and market commentary from The Kobeissi Letter have noted that interest rates on their own look historically unremarkable, but that the sheer size of the debt leaves the government's finances far more exposed than in past decades. Economist Ed Yardeni has pointed to the growing rivalry between government and corporate borrowers for the same pool of capital, a dynamic economists describe as a crowding out effect that adds further strain to federal finances.