America Is Spending Nearly 20% of Its Revenue on Interest

Episode 300 of The Secret War on Cash returns to the issue that has become increasingly difficult for Washington to avoid: debt.

Dean Heskin and Chris Agelastos begin with an article stating that annual U.S. interest expense has reached its highest share of federal revenue since 1991.

According to the figures discussed in the episode, interest costs are approaching 20% of federal revenue.

Chris compares the situation with an individual earning $50,000 annually and losing a substantial share simply servicing credit-card interest without reducing the underlying balance.

The comparison becomes more troubling when the hosts look back to 1991.

Interest rates at that time were around 8%, while rates discussed today are closer to the low-5% range. Dean and Chris argue that if current borrowing costs rose toward those earlier levels, the federal government's interest burden could become substantially worse.

They also note that the share of revenue devoted to interest has increased dramatically over the last several years.

The second article in the episode introduces an even larger number.

Gerald Celente is cited as arguing that total U.S. obligations may be closer to $126 trillion rather than the roughly $40 trillion conventional debt figure because the larger estimate includes future commitments such as Social Security and Medicare.

The episode does not independently establish that $126 trillion figure, but uses the claim to illustrate the importance of looking beyond outstanding Treasury debt when assessing long-term fiscal obligations.

That creates a difficult policy environment.

Higher interest rates increase the cost of financing the debt. But keeping rates lower can weaken the dollar, contribute to inflationary pressure, and reduce confidence in dollar-denominated assets.