Per Wealth datathrough January 31, interest expenses paid totaled $427 billion. Extending that trajectory over the course of a year, and with more debt added, requiring more interest service payments, the US government would have to pay $1 trillion per year to service its borrowing. This benchmark was first hit in FY2024 when interest payments totaled $1.13 trillion. In FY2025 that increased to $1.22 trillion.

“We’re only a third of the way through FY 2026, and yet we’re stuck in the usual perpetual debt … If we continue to borrow at this rate, it will leave us on the path to an annual $1.8 trillion or higher deficit,” according to Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“If these estimates aren’t alarming enough, the national debt continues to climb to record levels, equivalent to the size of the entire US economy today… Unless policymakers want high debts and deficits to become our norm, both sides of the aisle must come together to address our unsustainable borrowing.

Despite the shocking numbers and the warnings from committee chiefs, the market and many economists are relatively comfortable with America’s financial situation. When markets panic about Uncle Sam’s spending spree, bond yields are among the first red flags to go up. Rising yields, for example, could be a signal that investors are demanding higher premiums because the perceived risk of lending has increased. Conversely, falling yields may be a signal that bond issuance is greater than demand from investors.

None of this happened. At the time of writing, 30-year Treasuries are sitting at 4.8%—relatively elevated compared to late last year but still in line with most of 2025. 10-year Treasuries are similar, floating around the 4.2% mark since last spring.

Within the sphere of influence

Despite theories that foreign investors may use their holdings of US debt to punish America for its increased aggression towards its allies, or warnings that investors may withdraw from the market due to policy (a la Liz Truss), many economists think the result is less dramatic. “Financial repression” is one option: Mandating that institutions must hold more debt, thereby ensuring that buyers can support its value. Or inflation could be allowed to creep higher: Bad for consumers, but it would destroy the real value of the loan. Quantitative easing could be another option, as increasing the money supply may prove inflationary but have the desired effect of lowering the real cost of borrowing.

This is likely to give confidence to investors, as the US may be somewhat equipped to handle a debt crisis, should one occur.

But if the country cannot grow itself out of a poor debt-to-GDP balance, the outcome will not be a palatable one. A lot of funding will continue to be diverted into continuing to borrow—something Bridgewater Associates founder Ray Dalio often complains about. Dalio warned of an impending “heart attack” in the economy, in a series of social media posts and interviews, including luckDiane Brady.

“We spend 40% more than we take in, and this is a constant problem,” he said in a show on Fox Business last year. “What you’re seeing is debt service payments… good at squeezing, so it’s like plaque on the arteries, squeezing out purchasing power.”