National debt interest payments have surged 34% to nearly $1T, exceeding defense and Medicare budgets.
The Treasury Department will need to refinance nearly one-third of the more than $36 trillion in debt owed by the federal government, which serves as a backdrop to President Donald Trump's repeated calls for the Federal Reserve to cut interest rates.
A report by the Treasury's Office of Debt Management for the second quarter of fiscal year 2025 shows that as of April 30, 31.4% of the outstanding national debt will be due for refinancing within the next year.
That amounts to about $11 trillion in U.S. debt securities that will have to be refinanced over the course of the next 12 months.
The cost of servicing the more than $36 trillion national debt has escalated in recent years as interest rates rose to counter the most significant inflationary cycle the U.S. economy has faced in four decades.
In fiscal year 2024, interest costs incurred through servicing the national debt jumped by $239 billion, or 34%, to a total of $949 billion. That amount is larger than both the Department of Defense's discretionary budget and federal spending on Medicare.
The rising cost of servicing the national debt, along with spending growth in Social Security and Medicare due to the aging of America's population, are the main drivers of the widening federal budget deficit – which is projected to total about $1.9 trillion in fiscal year 2025.