Federal budget watchdogs are sounding urgent alarms after the U.S. government reached a troubling fiscal milestone in fiscal year 2025: the cost of servicing the national debt’s interest surpassed $1 trillion for the first time in history. That staggering figure now rivals major federal spending priorities and raises fresh concerns about America’s financial future.
According to the Congressional Budget Office, net interest payments on the debt topped $1 trillion after coming in at roughly $970 billion in fiscal 2025, while the federal government added approximately $1.8 trillion to the overall $38 trillion national debt. The jump in interest costs now exceeds defense spending, nearly matches Medicare outlays, and represents roughly two‑thirds of Social Security expenses.
Chris Towner of the Committee for a Responsible Federal Budget warned that unchecked debt and interest growth could trigger a dangerous debt spiral. “If we keep borrowing and lenders start doubting our ability to pay back, interest rates could rise — which means we’d need to borrow more just to cover that interest,” Towner told The Center Square. “That’s what economists mean by a debt spiral.”
Towner noted that at about 100% of U.S. gross domestic product (GDP), the national debt’s share of the economy is approaching levels not seen since the end of World War II, when debt briefly hit 106% of GDP. If current borrowing trends continue, the U.S. is on track to reach or exceed that historic mark within the next five years.
The implications extend beyond raw budget math. High debt and rising interest costs can slow economic growth by crowding out private investment — meaning fewer businesses expand or hire because government borrowing drives up the cost of capital. Higher interest rates across the economy become more likely when the cost of government borrowing spikes.
Unlike spending on Social Security or Medicare, which delivers benefits to Americans, interest payments on the debt produce no direct return. “We’re just paying it because we borrowed so much,” Towner said. “There’s no benefit beyond servicing past debt.”
Towner underscored that Congress could tackle runaway spending through a mix of discretionary spending caps, bipartisan fiscal commissions, and careful entitlement reforms to make Social Security and Medicare solvent. However, political resistance to cuts or tax increases remains a major hurdle.
Without substantive action soon, officials warn that the U.S. fiscal outlook will grow increasingly precarious — with higher taxes, slower growth, and mounting pressure on future generations.
