Here's a sobering way to think about the U.S. government's finances: for the first six months of this fiscal year, it spent almost as much money just paying interest on its debt as it did on the entire military and the entire education system combined.
According to a Congressional Budget Office report published Wednesday, interest payments on public debt hit $529 billion from October through March. Defense spending was $461 billion over the same period. Education was $70 billion. You do the math.
That's a $33 billion increase from the same stretch last year, driven by the simple, brutal mechanics of more debt and higher long-term interest rates. The CBO noted that declines in short-term rates provided only partial relief against the overall climb in debt servicing costs.
The broader fiscal picture shows a deficit of $1.2 trillion for the half-year. Total outlays were $3.7 trillion, up 2%. Revenues came in at $2.5 trillion, a 10% increase that was partly buoyed by a sharp jump in customs duties following new tariff measures.
On the spending side, the big mandatory programs are getting bigger. Spending on Social Security, Medicare, and Medicaid increased by $109 billion, or 7%. Social Security was up $42 billion, Medicare $34 billion, and Medicaid $33 billion. Defense spending rose $18 billion, while education outlays fell $9 billion.
All this is happening in a political and market context that's getting louder about the risks. JPMorgan Chase & Co. (JPM) CEO Jamie Dimon has warned that the country's fiscal trajectory cannot be ignored indefinitely, cautioning that delays could trigger volatile markets and reduce appetite for U.S. Treasuries.
Meanwhile, Sen. Elizabeth Warren (D-Mass.) criticized President Trump's proposal to raise military spending above $1 trillion, highlighting the trade-offs with health care, housing, and education programs.
And it's not just a government story. Pressure is building on U.S. consumers, too. Subprime loan delinquency rates hit 10% in recent data, an 11-year high according to Equifax and Moody's Analytics.
So the bill for past borrowing is getting harder to ignore, and it's starting to crowd out other things we might want to spend money on. It's the kind of number that makes bankers and politicians alike start talking about trajectories and sustainability. Because $529 billion in interest is a lot of coffee.
