US debt interest rates approach record high

US debt interest rates continued to rise, reaching 18.7% of federal revenues in January 2025, the highest level since the 1990s, approaching the record of 18.9% set in 1992. The economic situation at the time, 1992, was what led to the fall of Republican US President Bush Sr. and deprived him of a second presidential term against Democratic candidate Bill Clinton, as the phrase (it’s the economy, stupid) was widely used in Clinton’s campaign.

This rise in the percentage of payments reflects a significant increase in interest costs on US debt.

Interest expenses on US debt in the past 12 months amounted to about $1.2 trillion, making it the second largest government expenditure after Social Security. These expenses are expected to reach 34% of federal revenues by 2054, unless the economy experiences a recession.

The International Monetary Fund warned in April 2024 that the record level of US government debt poses a threat to global financial stability. The United States currently holds $36.2 trillion in government debt. By 2025, $9.2 trillion in US debt, or 25.4% of the total debt, is expected to be due. Since 2008, debt has increased by $23 trillion, an increase of 230%.

With the average interest rate on US Treasury debt rising to 3.2%, the highest level since 2010, the US government is under great pressure to reduce interest rates, an issue that requires urgent attention.

In general, America is facing a major crisis due to the rise in government debt, and as some of this debt is due to be repaid, the high interest rate increases the cost of these loans if they are refinanced, which poses a major threat to the US economy.

In 2025, the US debt of $9.2 trillion will be due, and the Washington government has only two options: pay it off – an unexpected solution – or refinance these loans at higher interest rates, which is a preferred option for US governments, but at any cost. According to CNN. The United States currently holds $36.2 trillion in government debt, meaning that 25.4% of the total is due to be repaid. According to the US Treasury Department’s financial data website, the US government debt is currently equivalent to the output of China, Japan, Germany, India and the United Kingdom combined. Since 2020, the United States has added $11.8 trillion to its national debt, which constitutes more than a third of the current total. To put the picture in perspective, the government debt was $9.2 trillion in 2008, and in 1981, it crossed the trillion-dollar mark for the first time.