debtinterest

“US debt interest exceeds $1T” usually refers to the federal government’s annual net interest cost—the interest Treasury pays on publicly held debt (net of certain interest receipts). In fiscal year 2025, budget analysts citing the Congressional Budget Office (CBO) reported that interest costs surpassed $1 trillion for the first time, up from about $949 billion in FY 2024.
This happens for two straightforward reasons: the debt stock is very large, and the average interest rate on that debt has risen. As older, lower-rate bonds mature, the government refinances them at current (often higher) yields. Meanwhile, ongoing budget deficits add new borrowing that also carries today’s rates—creating a compounding effect: more debt × higher rates = much bigger interest bills.
Why it matters: interest is a must-pay expense that doesn’t fund new programs, so it can crowd out other priorities and make deficits harder to shrink without policy changes.

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