US interest expense hits $963 billion in first 10 months of fiscal 2026
This digest was compiled by AI from multiple sources — links to the originals are below.
US federal interest expense reached $963 billion in the first 10 months of fiscal 2026, up 14% from $846 billion a year earlier, according to the Congressional Budget Office. The increase outpaced growth in Social Security, Medicare, and Medicaid. Treasury Secretary Scott Bessent announced a plan on August 19 to buy 10-year Treasuries to curb interest costs.
Key Facts
- Interest expense rose to $963 billion in the first 10 months of fiscal 2026, a 14% increase from $846 billion in the same period of fiscal 2025.
- The federal debt reached $40 trillion by August 22, 2026, up 7.3% since the start of the year.
- The budget deficit grew 10% to $1.8 trillion through July 2026.
- Treasury Secretary Scott Bessent unveiled a plan on August 19, 2026, to buy 10-year Treasuries and sell shorter-term bonds to lower average yields.
Interest Expense Surge
The Congressional Budget Office reported that interest expense reached $963 billion in the first 10 months of fiscal 2026, up from $846 billion a year earlier. The 14% increase was the largest jump of any expense line item, compared with 5% growth for Social Security and 8% each for Medicare and Medicaid. Interest expense now equals 70.1% of Social Security outlays, up from 64.9% a year ago.
Debt and Deficit Drivers
The federal debt swelled to $40 trillion by August 22, 2026, a 7.3% increase since the start of the year. The budget deficit mushroomed by 10% to $1.8 trillion through July 2026. The yield on the 2-year Treasury note rose from 3.94% to 4.18% since July 2025, while the 10-year yield climbed from 4.37% to 4.69%.
Treasury Response
Treasury Secretary Scott Bessent announced on August 19, 2026, that the Treasury would buy large amounts of 10-year Treasuries and sell newly issued shorter-term bonds at lower rates. The strategy aims to lower the average yields paid on federal borrowings by shifting to a shorter maturity mix. The plan is considered a stop-gap measure that does not address the underlying growth in federal borrowing.
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US interest expense hits $963 billion in first 10 months of fiscal 2026
