The federal government's interest payments on public debt reached $529 billion in the first half of fiscal year 2026, nearly equaling the combined spending on defense ($461 billion) and education ($70 billion), according to the Congressional Budget Office (CBO) report published Wednesday.
This represents a $33 billion increase from the same period last year, driven by a larger debt load and higher long-term interest rates.
The federal deficit totaled $1.2 trillion, with total outlays of $3.7 trillion (up 2%) and revenues rising 10% to $2.5 trillion, partly buoyed by a sharp jump in customs duties following new tariff measures.
Spending on Social Security, Medicare, and Medicaid increased $109 billion (7%), with Social Security up $42 billion, Medicare $34 billion, and Medicaid $33 billion. Defense spending rose $18 billion, while education outlays fell $9 billion.
Political And Market Context
JPMorgan Chase & Co. CEO Jamie Dimon (NYSE:JPM) warned that the country's fiscal trajectory cannot be ignored indefinitely, cautioning that delays could trigger volatile markets and reduce appetite for U.S. Treasuries.
Sen. Elizabeth Warren (D-Mass.) criticized President Trump's proposal to raise military spending above $1 trillion, highlighting the impact on health care, housing, and education programs.
Meanwhile, subprime loan delinquency rates hit 10%, an 11-year high according to Equifax and Moody's Analytics, compounding pressure on U.S. consumers.
The CBO noted that declines in short-term interest rates provided only partial relief against the overall rise in debt servicing costs.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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