For the first time in American history, the US government is spending more to service its debt than it spends on Medicare. Through the first seven months of fiscal 2026, the Treasury paid $628 billion in net interest, exceeding gross Medicare spending of $588 billion and Medicaid’s $409 billion, according to the Congressional Budget Office’s Monthly Budget Review. Measured net of offsetting receipts (gross Medicare minus beneficiary premiums), the crossover slips to roughly 2028-2029. Either way, the direction is the same.
The Number That Should Worry You
Here it is: $23.8 billion per week. That is what Washington has paid every single week just to service the national debt through the first eight months of fiscal 2026, roughly $3 billion every day, before a dollar goes to defense, healthcare, education, or infrastructure. Only one federal program, Social Security ($953 billion year-to-date), is currently larger.
The Full Picture
CBO projects net interest will hit $1.039 trillion for full-year fiscal 2026, a 7% increase following jumps of 10% and 34% in the two prior years. Since fiscal 2020, interest expense has ballooned from $345 billion (1.6% of GDP) to $1 trillion (3.3% of GDP), a 190% increase in six years, per the Peter G. Peterson Foundation. At 3.3% of GDP, interest now eclipses the post-WWII high of 3.2% set in 1991 and will consume 18.6% of all federal tax revenues in 2026. The American Action Forum pegs the 10-year interest bill at $16.2 trillion, more than today’s entire national debt of roughly $39.4 trillion.
Where This Goes
CBO’s path has interest reaching $2.1 trillion by 2036, exceeding both defense and non-defense discretionary spending by 2038, and surpassing Social Security by 2047. By 2048, interest is officially the biggest “program” in the budget, the government spending more to service the past than to invest in the future. By 2056, AAF projects $6.6 trillion annually, a 538% increase from today.
Why It’s Happening
Three drivers: the sheer size of the debt, rate normalization (debt issued at 0-1% is now rolling over at 4-5% and up, with the 30-year Treasury at 5.10% as of July 13), and the compounding trap where structural deficits feed interest, which feeds the deficit. This is a bipartisan problem accumulated under administrations of both parties.
The Newest Wrinkle
The One Big Beautiful Bill Act, signed July 4, 2026, is projected by the Committee for a Responsible Federal Budget to add roughly $6.9 trillion to the debt over 10 years once higher interest costs are counted. Tariff revenue has surged 220% year over year in the first seven months of fiscal 2026, from $59 billion to $190 billion, but has not closed the gap. CRFB president Maya MacGuineas: “We will likely borrow $2 trillion or more this fiscal year, an astounding figure given that the economy keeps growing and unemployment is low.” She adds that “Social Security and Medicare are within seven years of trust fund exhaustion.” The backdrop sharpens the imbalance: unemployment sits at 4.2% and real GDP growth is 2.1%.
What It Means for Your Portfolio
Growing deficits mean more Treasury issuance, which generally pushes yields up and pressures bond prices and equity valuations. Heavy interest costs leave less room for fiscal stimulus in downturns. Rising debt-to-GDP is a long-term headwind for the dollar and strengthens the structural case for inflation hedges like gold. By the time today’s 30-somethings reach their 50s, interest is projected to be the largest line in the federal budget.
The Other Side
The outcome remains a choice. US debt-to-GDP was higher after WWII, and the country grew its way out. The dollar’s reserve-currency status lets America borrow more cheaply than anyone else. CBO projections assume current law holds, and Congress routinely changes course. The debt math is daunting, but it is a choice, which is exactly why the 2026 milestones are worth paying attention to now.
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