Federal debt/interest burden
Updated
What it is
This is a U.S. macro watch item tracking how much the federal government spends servicing its debt relative to total revenue and GDP, rather than a single published index. The Congressional Budget Office (CBO) publishes the underlying net-interest figures and compares them to other categories of federal spending such as defense and Medicaid. Because interest costs are driven by both the stock of outstanding debt and prevailing interest rates, this burden rises mechanically when either deficits or rates increase.
Why it matters lately
Net interest payments reached $270.3 billion in the first three months of fiscal year 2026 (October-December 2025), surpassing the $266.9 billion spent on defense over the same period, and CBO has projected net interest costs will rise to roughly $1 trillion for all of fiscal year 2026, exceeding the $885 billion defense budget and $708 billion in Medicaid spending. CBO also projects interest costs will reach about 3.3% of GDP in 2026, surpassing the prior record set in 1991.
Asymmetric Analytics view
Inference (AA): AA treats this burden as a macro constraint that can crowd out fiscal space for defense, crisis response, and other priorities, feeding into AA's broader debt-sustainability and policy-risk models.