Lawmakers Face Post-Election Reality Check on Rising Government Debt and Interest Costs
Following the recent election, U.S. lawmakers are confronting the significant challenge of a growing budget deficit and elevated inflation, which are driving up government borrowing costs. According to Joseph Brusuelas, the budget deficit is currently running near 6% of gross domestic product, a historically high level. Interest payments on the national debt have become the third-largest expenditure, surpassing national defense spending and other areas like education and scientific research. In fiscal year 2026, interest payments to holders of U.S. debt amounted to $1.052 trillion. A substantial portion of the $40 trillion in total outstanding federal debt, approximately $32 trillion, is marketable and subject to market-determined interest rates. This debt, much of which was issued at historically low rates, now needs to be rolled over at higher rates, exacerbating the government's financial burden. The bond market's demand for higher yields on government debt is a direct response to the rising cost of liv...
