Interest on the $38.8 trillion national debt has tripled since 2020, topping defense and Medicaid

For many Americans, the number barely registers. But budget experts warn it represents one of the most consequential — and least discussed — fiscal emergencies in the country’s history.​

The rapid climb didn’t happen overnight. Interest costs have surged due to a one-two punch: the federal debt load has ballooned by trillions, while interest rates climbed sharply from near-zero post-pandemic lows. As a share of the economy, interest costs have doubled from 1.6% of GDP in 2021 to a record 3.2% in 2025. Today, the government already spends more on debt interest than on Medicaid or the entire national defense budget, programs Americans viscerally feel and politically fight over. Yet the interest line item draws comparatively little outrage.​​

The $2 trillion threshold

The numbers ahead are even more staggering. According to the Congressional Budget Office’s latest baseline, net interest costs are projected to more than double again, from $970 billion in fiscal year 2025 to $2.1 trillion by 2036.

Between now and 2036, debt held by the public is expected to grow by 86%, adding roughly $26 trillion, while the average interest rate on that debt will tick up another half a percentage point. Together, they will drive interest costs up by 121%.​​

By 2036, interest payments will consume one-quarter of all federal revenue, up from roughly one-fifth today and just one-tenth back in 2021. Put another way: for every four dollars the U.S. collects in taxes, one will go entirely toward paying creditors — not roads, not veterans, not schools.​

When Medicare gets passed

Right now, interest spending sits roughly neck-and-neck with Medicare, one of the most popular and politically untouchable programs in the federal budget. The CBO projects that by 2029, net interest costs will officially surpass Medicare, making it the second-largest government program, trailing only Social Security. That milestone is less than four years away.​

The trajectory doesn’t stop there. By 2047, CBO projects interest costs will exceed even Social Security spending, ascending to become the single largest line item in the entire federal budget — larger than retirement income, larger than health care for seniors, larger than the military.​

A Crowding-out crisis

The consequences extend beyond accounting. As interest costs swell, they crowd out virtually every other national priority. The CRFB projects that rising interest costs will account for 28% of all nominal spending growth over the next decade and 120% of all spending growth as a share of GDP, meaning other programs will effectively shrink in relative terms just to make room.​

The national debt currently stands at approximately $38.77 trillion as of February, growing at roughly $6.43 billion per day. At that pace, the U.S. is projected to hit $39 trillion by approximately April.

CRFB and other fiscal watchdogs argue that a credible deficit reduction plan remains the only viable off-ramp — one that would put debt on a sustainable path, ease pressure on interest rates, and prevent the interest bill from ultimately devouring the budget entirely. So far, Washington has not produced one.​

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.