The cost of financing the U.S. government's record debt is accelerating, with interest payments emerging as one of the fastest-growing items in the federal budget as the national debt surpasses $39.4 trillion, according to new estimates from the Congressional Budget Office (CBO).
The CBO reported that the federal government is now spending roughly $24 billion every week on interest payments alone, underscoring how rising borrowing costs are consuming an increasing share of federal resources. The figures come as the Treasury continues to finance persistent budget deficits, with borrowing averaging $155 billion per month during the first nine months of fiscal year 2026.
The latest budget projections illustrate a broader fiscal challenge confronting policymakers. While government spending continues to rise for major entitlement programs such as Social Security, Medicare and Medicaid, the growing cost of servicing existing debt is increasingly competing with other federal priorities.
According to the CBO, federal borrowing totaled approximately $1.39 trillion during the first nine months of fiscal 2026, which began in October. At the same time, interest expenses reached an estimated $939 billion, an increase of $100 billion, or 13%, compared with the same period a year earlier.
Higher long-term interest rates and an expanding debt burden have combined to push borrowing costs sharply upward after years of historically low financing costs that followed the 2008 financial crisis.
The size of those interest payments has become increasingly significant when compared with other areas of federal spending.
According to the CBO's estimates, interest expenses exceeded the combined spending on numerous federal departments and agencies, including:
- The Department of Commerce
- The Department of Education
- The Department of Homeland Security
- The Environmental Protection Agency
- The Small Business Administration
- Several additional federal programs
The report also estimated that total interest payments exceeded Defense Department outlays by approximately $20 billion during the same nine-month period.
Meanwhile, mandatory spending continued to climb across major entitlement programs.
The CBO estimated:
- Social Security spending increased by $62 billion, reflecting both larger benefit payments and a growing number of recipients.
- Medicare expenditures rose by $58 billion, driven by higher enrollment and increased reimbursement rates.
- Medicaid spending increased by $49 billion, representing roughly 10% growth, largely because of higher costs per enrollee.
Unlike spending on infrastructure, education, national defense or healthcare services, interest payments do not finance new government programs. Instead, they represent the cost of borrowing to cover obligations accumulated over previous years.
Many economists argue that this dynamic gradually limits policymakers' flexibility. As interest consumes a larger portion of federal revenues, lawmakers face fewer resources for new initiatives unless taxes rise, spending is reduced elsewhere or additional borrowing occurs.
