Interest on the national debt is eating a record 19% of federal revenue — and watchdog warns it will get worse
The federal government is facing a record 19% of its revenue going towards interest on the national debt, surpassing spending on Medicaid and national defense. With rising Treasury yields, a fiscal watchdog warns that this situation could worsen significantly, potentially leading to a debt spiral. Lawmakers are urged to reduce deficits to mitigate the impact of high interest rates on the economy and government spending.
- ▪Interest costs consumed a record 3.25% of GDP and roughly 19% of all federal revenue in fiscal year 2025.
- ▪If Treasury yields remain elevated, interest costs could grow from $880 billion today to $2.5 trillion by 2036.
- ▪By 2027, interest costs are projected to overtake Medicare spending, becoming the second-largest government program.
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The federal government already spends more on debt interest than on Medicaid, national defense, or all non-defense discretionary programs combined. Now, with the 30-year Treasury yield surging past 5.19% — its highest level in almost 20 years — a leading fiscal watchdog is warning that what was already a crisis could turn into something far worse.Recommended Video According to the Committee for a Responsible Federal Budget (CRFB), interest costs consumed a record 3.25% of GDP and roughly 19% of all federal revenue in fiscal year 2025. If Treasury yields remain elevated at current levels — roughly 55 basis points above Congressional Budget Office projections across the yield curve — interest costs would grow 2.5-fold, climbing from $880 billion today to $2.5 trillion by 2036.
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Excerpt limited to ~120 words for fair-use compliance. The full article is at Fortune.
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