The US government’s debt servicing cost has reached historic highs, with interest payments between October 2025 and March 2026 totaling $529 billion. This spike reflects a growing challenge for the country, as managing the national debt is taking up a greater share of federal revenue and matching expenditures in core sectors.
Interest expenses now rival defense and education budgets
During the most recent six-month period, the federal government spent roughly $88 billion per month on interest alone. This level of expenditure outpaced the combined spending on the Department of Defense, which received $461 billion, and the Department of Education, with a $70 billion allocation over the same timeframe.
A year prior, interest outlays came in at $497 billion for the same period, marking a 7% or $33 billion increase in just twelve months. Rising long-term interest rates and a larger overall debt base were cited as primary factors behind this acceleration. The Congressional Budget Office (CBO) projected that while short-term rate declines offered some relief, these were not enough to offset overall cost increases.
Because the debt was larger than it was in the first half of fiscal year 2025, and because of higher long-term interest rates. Declines in short-term interest rates partially mitigated the overall rise in interest payments, according to the CBO.
Fiscal strain is also evident in how much of federal revenue is being diverted to service the debt. Data from financial analytics provider The Kobeissi Letter found the US government spent 18 cents of every dollar of revenue on interest in Fiscal Year 2025, the highest share since the 1990s.
Since 2015, this ratio has tripled, demonstrating a substantial shift in fiscal priorities and limitations. With the national debt now exceeding $39 trillion, experts warn that this trend may continue unless broader structural changes occur.
Implications for crypto and other hard assets
Rising debt costs and worries about fiscal sustainability are leading more investors to consider scarce assets such as Bitcoin and gold as alternatives. The case for these assets has strengthened as traditional public finances show increasing signs of stress and governments worldwide face similar pressures.
Bitcoin in particular has maintained relative stability even during periods of geopolitical uncertainty, including recent tensions involving the US and Iran. Gold, on the other hand, saw its value slip as global uncertainty grew.
The ongoing situation is fueling debate about Bitcoin’s role as either a durable inflation hedge or a high-beta asset tied more closely to broader market sentiment. However, the escalating cost of government borrowing and the corresponding risks appear to be solidifying arguments in favor of limited-supply digital assets.
Looking ahead, the CBO forecasts that interest expenses could rise to 25 cents per dollar of federal revenue by 2035, assuming a stable economic environment. This trajectory suggests that the structural problems behind the US fiscal deficit will likely persist, with potential implications for both traditional and digital asset markets.
