Source: Fortune.com
Summary
The U.S. federal interest burden hit a record 18.5% of revenue in 2025, surpassing the 1991 high of 18.4%, according to Doubleline. The $1.25 trillion in interest payments equals the 2026 defense budget. The Congressional Budget Office projects interest expenses to rise to 25% of revenue by 2036. The national debt now exceeds 100% of GDP, up from 44% in 1991. Tech companies are also borrowing heavily, adding pressure to the bond market.
Our Reading
The numbers tell one story.
Federal interest payments hit a record 18.5% of revenue in 2025.
Debt now exceeds 100% of GDP, up from 44% in 1991.
Corporate borrowing is adding pressure to Treasury yields.
The government is now more vulnerable to interest rate changes than ever before.
Author: Evan Null
Record Interest Payments
The federal interest burden has reached a new high, surpassing the 1991 record. In 2025, the U.S. spent 18.5% of its revenue on interest payments, which equals $1.25 trillion. This is more than the entire 2026 defense budget. Analysts say the current debt levels make the government more sensitive to interest rate changes than in the past.
Debt as a Share of GDP
In 1991, the national debt was about 44% of GDP. Today, it has grown to over 100% of GDP. This means the government is paying a larger share of its revenue just to service the debt. The increase in debt has been driven by years of deficit spending and rising interest rates.
Corporate Borrowing and the Bond Market
Major tech companies, especially AI firms, are issuing large amounts of debt. In the first half of 2026, they issued $225 billion in bonds. This borrowing is adding pressure to the bond market and may be contributing to higher Treasury yields. The capital used for these investments is often tax-deductible, which could worsen the national debt.
Government Intervention in the Bond Market
To stabilize the bond market, Treasury Secretary Scott Bessent doubled the size of bond buybacks. The Treasury is now buying $4 billion in 10-to-30-year bonds per operation. This move surprised investors and shows how critical the government sees the bond market. It also blurs the line between managing cash and controlling the market.
Future Projections and Risks
The Congressional Budget Office predicts that interest expenses will rise to 25% of revenue by 2036. Analysts warn that the U.S. is in uncharted territory with its debt. The combination of high debt, rising interest rates, and corporate borrowing is creating a challenging fiscal environment. The government must balance its need to borrow with the risk of higher interest costs.
