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America Now Spends More on Interest Than Defense
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Key Takeaways
- U.S. interest payments surpassed defense spending in 2024 for the first time in nearly a century.
- The gap is projected to widen significantly, with interest costs reaching $2.1 trillion by 2036—almost double defense spending.
- Rising debt and higher rates are making interest the fastest-growing part of the federal budget.
For the first time since the late 1920s, the U.S. is spending more on interest payments than on national defense.
That shift marks a turning point in federal priorities. As debt levels climb and borrowing costs rise, interest payments are taking up a growing share of the budget—projected to hit $2.1 trillion by 2036, far outpacing defense spending.
This chart compares annual U.S. net interest payments and defense outlays from 1996 to 2036, based on data from the White House and projections from the Congressional Budget Office (CBO) as of February 2026.
U.S. Interest vs. Defense Spending (1996–2036P)
In 2024, U.S. interest payments reached $879.9 billion, surpassing defense spending of $850.7 billion.
Projections through 2036 show interest payments continuing to pull ahead, even as defense spending rises.
The table below shows how annual U.S. net interest payments and defense spending changed from 1996 to 2025, along with projections from 2026 to 2036:
| Year | U.S. Annual Net Interest Payments (billions) | U.S. Annual Defense Spending (billions) |
|---|---|---|
| 1996 | $241.1 | $266.0 |
| 1997 | $244.0 | $271.7 |
| 1998 | $241.1 | $270.2 |
| 1999 | $229.8 | $275.5 |
| 2000 | $222.9 | $295.0 |
| 2001 | $206.2 | $306.1 |
| 2002 | $170.9 | $349.0 |
| 2003 | $153.1 | $404.9 |
| 2004 | $160.2 | $454.1 |
| 2005 | $184.0 | $493.6 |
| 2006 | $226.6 | $520.0 |
| 2007 | $237.1 | $547.9 |
| 2008 | $252.8 | $612.4 |
| 2009 | $186.9 | $656.7 |
| 2010 | $196.2 | $688.9 |
| 2011 | $230.0 | $699.4 |
| 2012 | $220.4 | $670.5 |
| 2013 | $220.9 | $625.8 |
| 2014 | $229.0 | $596.4 |
| 2015 | $223.2 | $583.4 |
| 2016 | $240.0 | $584.8 |
| 2017 | $262.6 | $590.2 |
| 2018 | $325.0 | $622.7 |
| 2019 | $375.2 | $676.4 |
| 2020 | $345.5 | $713.8 |
| 2021 | $352.3 | $741.6 |
| 2022 | $475.9 | $752.1 |
| 2023 | $658.3 | $806.2 |
| 2024 | $879.9 | $850.7 |
| 2025 | $970.0 | $893.0 |
| 2026P | $1,039.0 | $885.0 |
| 2027P | $1,108.0 | $901.0 |
| 2028P | $1,218.0 | $928.0 |
| 2029P | $1,324.0 | $938.0 |
| 2030P | $1,432.0 | $966.0 |
| 2031P | $1,548.0 | $986.0 |
| 2032P | $1,670.0 | $1,006.0 |
| 2033P | $1,784.0 | $1,034.0 |
| 2034P | $1,904.0 | $1,051.0 |
| 2035P | $2,019.0 | $1,068.0 |
| 2036P | $2,144.0 | $1,100.0 |
How Interest Overtook Defense Spending
Between 1996 and 2001, U.S. defense spending averaged about 30% higher than net interest costs, as falling interest rates and budget surpluses kept debt servicing relatively low.
That gap widened sharply after 9/11. Military spending doubled over the following decade, reaching $699 billion in 2011, while interest costs rose more slowly to $230 billion.
During the low-interest-rate era of the 2010s, borrowing costs stayed low even as federal debt nearly doubled—from $9.0 trillion in 2010 to $16.8 trillion in 2019—masking the long-term cost of that debt.
After COVID-19, that dynamic reversed. A surge in borrowing combined with higher interest rates pushed debt servicing costs sharply higher, with net interest outlays nearly tripling to $970 billion by 2025.
At a projected $1.0 trillion in 2026, America’s net interest bill is set to become the fastest-growing major budget item.
By 2036, net interest outlays will more than double to $2.1 trillion, while defense spending is projected to reach $1.1 trillion.
If current projections hold, the U.S. will spend far more on servicing its debt than on national defense within a decade, raising questions about how future budgets will balance economic stability, security, and growth.
Why This Shift Matters
This crossover isn’t just symbolic. It marks a fundamental shift in how the U.S. allocates its resources—toward servicing past borrowing rather than funding current priorities.
As interest costs rise, a growing share of federal spending is effectively locked in, reducing flexibility for areas like defense, infrastructure, and research. Over time, this can crowd out new investments and make it harder for policymakers to respond to economic downturns or emerging challenges.
In other words, higher interest payments don’t just reflect rising debt—they actively shape what the government can afford to do next.
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