U.S. Debt Interest Surpasses $1 Trillion: Are Stablecoins the Key to Breaking the Deadlock?

The U.S. federal government has paid over $1 trillion in interest on national debt for the first time in fiscal year 2025. Interest expenditures now exceed defense spending and healthcare costs; this is a first in U.S. history.

Wall Street analysts and social media users frequently use the term "Weimar" in response to increasing warnings of financial crises. On the other hand, the U.S. Treasury has positioned stablecoins as a strategic tool to absorb the growing national debt.

According to the Congressional Budget Office's forecast, total cumulative interest payments over the next decade will reach $13.8 trillion—this means double the inflation-adjusted expenditures of the past twenty years.

The Federal Budget Committee warns that, in a scenario where tariffs are deemed illegal and recently introduced temporary measures are made permanent, interest costs could reach $2.2 trillion by 2035—this means an increase of 127% compared to current levels.

The debt-to-GDP ratio has reached 100%; this threshold has not been seen since World War II. By 2029, it will exceed the 106% peak of 1946 and reach 118% by 2035.

The most concerning issue is that this crisis exhibits a self-reinforcing structure. The federal government borrows about $2 trillion each year, with almost half of that used to pay interest on existing debt. CRFB analyst Chris Towner points out that a "debt spiral" may occur.

If our creditors suspect that we will be unable to repay all our debts, interest rates will rise. In this case, to be able to pay interest, we will have to borrow more debt.