Persistent budget deficits combined with a big jump in interest rates translate into a rapidly rising cost of servicing the national debt. According to an analysis by Bloomberg News, the annual cost of debt service is now running at more than $1 trillion per year, up from the $879.3 billion paid out in interest in fiscal year 2023, which ended in September. The estimated annual cost has doubled in the last 19 months.
Some analysts think the cost could continue to climb. “There will be further increases to Treasury coupon auctions and T-bills outstanding going forward,” Bloomberg Intelligence strategists Ira Jersey and Will Hoffman wrote. “Besides deficits of over $2 trillion in the foreseeable future, climbing maturities following the increase of issuance from March 2020 will also need to be refinanced.”