The United States is now spending nearly $970 billion a year just to service interest on its $38.8 trillion national debt — more than it spends on national defense or Medicaid. According to the Committee for a Responsible Federal Budget and projections from the Congressional Budget Office, interest costs are on track to exceed Medicare by 2029 and could become the single largest federal expense by 2047, raising alarms about a growing fiscal strain that threatens to crowd out other national priorities.
The United States is now spending nearly $970 billion annually just to cover interest on its $38.8 trillion national debt — a figure that has almost tripled since 2020 and now exceeds federal spending on both national defense and Medicaid.
According to a February analysis by the Committee for a Responsible Federal Budget (CRFB), rising interest payments represent one of the most significant — and least publicly debated — fiscal challenges facing the nation.
A Rapid Escalation
The sharp increase stems from two primary forces: a dramatic expansion of federal borrowing and higher interest rates following the near-zero rate environment of the pandemic era. As debt levels swelled into the trillions and rates climbed, the government’s borrowing costs surged.
Interest payments have doubled as a share of the economy, rising from 1.6% of GDP in 2021 to a record 3.2% in 2025. Today, the federal government spends more servicing its debt than it does funding Medicaid or maintaining the military — two areas that typically dominate budget debates.
Yet, unlike those politically sensitive programs, interest payments often draw little public attention.
Crossing the $2 Trillion Mark
The outlook is even more sobering. The Congressional Budget Office (CBO) projects that annual net interest costs will more than double again — climbing from $970 billion in fiscal year 2025 to $2.1 trillion by 2036.
Over that same period, debt held by the public is expected to grow by roughly 86%, adding an estimated $26 trillion. Combined with a projected rise in average interest rates, total interest costs are forecast to increase by 121%.
By 2036, interest payments are expected to consume one-quarter of all federal revenue. In practical terms, that means one out of every four dollars collected in taxes would go solely toward paying creditors — not toward infrastructure, education, veterans’ benefits or public safety.
On Track to Surpass Medicare — and Eventually Social Security
Currently, interest payments are roughly on par with Medicare spending. But CBO projections show that by 2029, interest costs will surpass Medicare, becoming the second-largest federal expenditure after Social Security.
The trend continues beyond that. By 2047, interest payments are projected to exceed even Social Security, making them the single largest expense in the federal budget — larger than retirement benefits, senior health care or defense spending.
A Growing “Crowding-Out” Effect
Beyond the headline numbers, economists warn of a broader impact: rising interest costs limit the government’s ability to fund other priorities.
The CRFB estimates that over the next decade, interest payments will account for 28% of all nominal spending growth and 120% of spending growth as a share of GDP. In effect, other programs would shrink in relative size simply to accommodate mounting debt obligations.
As of February, the national debt stood at approximately $38.77 trillion and continues to grow by roughly $6.43 billion per day. At that pace, it is projected to reach $39 trillion within months.
Fiscal watchdog groups argue that a comprehensive deficit-reduction plan is the only viable path forward — one that would stabilize debt levels, ease pressure on interest rates and prevent interest payments from overwhelming the federal budget. To date, lawmakers have yet to agree on such a plan.
This story was originally featured on Fortune.
