America now spends more on interest than on its military.
That is not a slogan. It is the Congressional Budget Office’s projection for fiscal year 2026, and the first quarter of the year confirmed it. Between October and December 2025, the federal government paid $270.3 billion in net interest and spent $266.9 billion on national defense.
The Numbers
- FY 2026 net interest (CBO projection): about $1.0 trillion, or 3.3% of GDP
- FY 2026 national defense (CBO projection): about $885 billion
- FY 2026 Medicaid (CBO projection): about $708 billion
- FY 2019 net interest: $375 billion. FY 2025: $971 billion
- FY 2036 net interest (CBO projection): $2.1 trillion, nearly double projected defense spending
Interest first passed defense in fiscal year 2024. Among major federal programs, only Social Security now costs more. CBO projects interest will grow from about 14% of all federal spending today to nearly 19% by 2036.
How Did We Get Here?
Two things drive interest costs: how much is borrowed and the interest rate paid on it. Both rose at once. Federal debt grew sharply through the pandemic years, and when interest rates climbed from near zero, older low-rate Treasury securities began maturing and being replaced with new ones at much higher rates.
The cost is also highly sensitive to rates going forward. According to analysis of CBO’s baseline, if rates run just one percentage point higher than projected each year, interest costs over the next decade would be about $3.2 trillion higher.
Why It Matters to Every Citizen
Interest is the one line in the budget that buys nothing. It does not fund a soldier, a road, a veteran’s appointment or a research grant. Every dollar spent on interest is a dollar unavailable for something else, or one more dollar borrowed.
This is not a problem that belongs to one party. Debt has grown under administrations and Congresses of both parties. The questions for voters are practical: Does a candidate have a plan to stabilize the debt relative to the size of the economy? Which tradeoffs among spending, revenue and growth are they willing to name out loud?
Note: Fiscal year 2026 runs through September 30, 2026. Final full-year figures will come from the Treasury’s year-end statement and CBO’s Monthly Budget Review.
Keep Digging With Truth Agent
This article is a starting point. Truth Agent puts the public record at your fingertips, including the Constitution, federal law, regulations, court opinions and oversight reports, so you can follow Treasury and CBO budget data as it is released without relying on anyone’s summary, including ours.
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Sources
- American Action Forum: Highlights of CBO’s February 2026 Budget and Economic Outlook
- House Budget Committee: CBO baseline, February 2026
- EPIC: Interest Spending Tracker, Q1 of FY 2026
- Committee for a Responsible Federal Budget: Interest on the debt
- American Action Forum: Interest Payments on the National Debt
- U.S. Treasury Fiscal Data: America’s Finance Guide
