America Sets a Bad Record. That’s the Good News

In seven days, America will set a very bad record. That’s the good news.

On September 30, the federal government closes its books for the fiscal year, and when it does, the interest Uncle Sam paid on his debt for fiscal 2026 will be the largest in America’s history.

We’re not talking about the debt itself, which now exceeds $40 trillion.

We’re talking about just the interest payments on the debt.

Just the cost of carrying the debt.

Treasury’s own tally shows that through August, interest payments have amounted to $1.27 trillion, up $139 billion from the same point last year. Twenty-six cents of every dollar DC collects in taxes now goes straight back out the door to those who loaned it the money so that America can keep the lights on.

That’s the bad record.

And here’s why it’s good news: The record only gets worse from here.

Think of the national debt as hundreds of mortgages Uncle Sam has taken out on one very large house—in different years, at whatever rate the bank was charging that day.

Some are from the 1990s at 6%.

A lot are from 2020, when the government borrowed trillions of dollars at just half a percent, or less.

Blended together, Washington right now pays about 3.5% on all of its IOUs.

Today, however, lenders are charging much higher rates: nearly 5% on a 10-year loan, and 4.76% for two years. Even short-term loans of less than a year cost about 4% or more.

You might already see the problem. It’s the same problem any homeowner with an adjustable-rate mortgage understands in their gut. The government isn’t paying interest at today’s rate. It’s paying yesterday’s rate, which was lower.

But every month, a chunk of yesterday’s debt matures, which means every month, the cost of running the government escalates automatically.

Uncle Sam doesn’t pay off his debt as it matures and then move on with his day.

He’s a serial debtor. He has no money to pay off his debts.

His only option is to roll them over into new debt at whatever the going rates are.

And the going rates are markedly higher than what he had been paying.

Just one example: One-month loans that Washington was selling in 2020 cost it next to nothing—some days, the rates were literally 0%. Today the same loan costs 4%.

I went through the Treasury Department’s ledger, line by line. Between this October and next September, $2.96 trillion of that old debt comes due. The average rate on all of it is just under 3%.

About $1.3 trillion of it—the pandemic-era borrowing—carries a rate of about 1.5%. Some of those loans, sold in the summer of 2020, cost the government just 0.375%.

Those get paid off next summer and replaced with new loans that are currently priced at 4.76%… and that’s before we start accounting for any rate hikes the Federal Reserve says are coming.

There’s no vote on this repricing.

There’s no debate to weigh in on. Or to stop it.

Trump cannot whip out the Sharpie and sign an Executive Order to make it all go away.

The old debt matures, new debt is sold, and the rate resets. Automatically. No other option.

Between $210 and $320 billion rolls over every month for the next year.

Outside of a crisis that crushes the economy and drives interest rates into the ground again, Uncle Sam’s blended interest rate is going nowhere but up—meaning America’s interest expense is going up even more… meaning America has to borrow even more money to cover the cost of the higher interest payments.

Congress could stop borrowing right now—balance the budget, no deficit, the whole utopian fantasy—and the interest bill would still climb next year, because 3% loans are rolling over, out of necessity, into 5% loans.

Next year, $3 trillion of these two-to-ten-year loans comes due.

The year after, it’s $3.3 trillion.

And behind those is another $10 trillion waiting its turn—an unwanted flood that keeps coming for the better part of a decade.

Uncle Sam borrowed most of those dollars when money was cheap. He’ll be refinancing every one of them now that it isn’t.

The Fed made it worse last week when it raised rates a quarter point.

Not all of Washington’s borrowing is the equivalent of a long-term mortgage. About $7 trillion of it is more like a credit card—loans that last a few weeks or a few months, then get paid off and the money borrowed again, over and over.

When the Fed raised rates a quarter point, the rate on that credit card went up almost immediately. That’s roughly $18 billion a year in new interest from a single Fed decision.

The Fed says another hike is coming.

So yes, this year’s interest bill is a record, and it arrived while the government was still enjoying the last of its cheap, old loans.

Next year fewer of those cheap loans are left. The year after, fewer still.

This month’s record is the cheapest year America has left.