US National Debt Interest Payments Hit $1.25 Trillion

The U.S. federal interest burden on its national debt has reached a new record, exceeding $1.25 trillion annually and consuming 18.5% of federal revenue in 2025. This figure surpasses the previous record set in 1991, when interest payments accounted for 18.4% of revenue. The national debt itself has grown to approximately $40 trillion. This escalating interest payment represents a significant portion of government income, equivalent to more than the entire projected 2026 defense budget. Analysts warn that the risks associated with servicing the current national debt are substantially higher than in 1991, despite the historical precedent. The growing interest payments create a self-perpetuating cycle where the government must borrow more money simply to cover the interest accrued on its existing debt. This necessitates a reduction in flexible spending for crucial areas such as infrastructure, education, and other investments that are vital for economic growth. The amount of money dedicated solely to paying interest on U.S. debt has dramatically increased over the past decade, driven by rising interest rates. According to the Kobeissi Letter, which cites the Congressional Budget Office, interest expense as a percentage of federal revenue has tripled since 2015. Projections indicate this trend will continue, with interest expense potentially climbing to 25% of revenue by 2036, a scenario that assumes no major economic slowdown, recession, or significant increase in Treasury yields. The current situation is described by the Kobeissi Letter as "uncharted territory" for the U.S. debt crisis. The context of the 1991 record differs significantly from today's environment. In 1991, the U.S. economy was in a recovery phase following a recession and was impacted by oil shocks from the Gulf War. High demand for bonds at that time helped to lower yields to approximately 8% for 30-year Treasuries, a decrease from over 10% in preceding decades. In contrast, Doubleline argues that while the government could manage an 8% interest rate when the national debt was considerably smaller, this is no longer feasible. In 1991, the debt held by the public represented about 44% of the U.S. GDP. Today, the debt held by the public has grown substantially, although the exact percentage of GDP is not provided in the source material for the current period, the absolute dollar amount of $40 trillion indicates a much larger debt burden relative to the economy.