The federal interest burden has reached a new height, exceeding even the 1991 record, but analysts warn the risks associated with servicing the ever-growing national debt today are much higher than they were 35 years ago, analysts warn.

A recent analysis from investment management firm Doubleline noted that in 2025, the federal net interest payment on the U.S.’s now-$40 trillion national debt reached 18.5% of revenue, surpassing 1991’s record 18.4%. That means the U.S. is collecting nearly 19% of all taxes and revenue just to pay off interest on its ballooning debt, equivalent to $1.25 trillion—more than the entire 2026 defense budget.

Growing interest payments create a cycle: the government must borrow more just to cover the interest, leaving it less flexible to spend on infrastructure, education, and other investments that drive growth.

The amount of money needed just to pay the interest on America’s debt has swelled over the last decade as interest rates have grown, with interest expense as a percentage of revenue tripling since 2015, according to global market commentator the Kobeissi Letter, citing the Congressional Budget Office, which predicts interest expense levels to climb to 25% by 2036.

“The US debt crisis is in uncharted territory,” the Kobeissi Letter wrote on a social media post. “These projections assume no major slowdown, recession, or significant rise in Treasury yields over this period.”

Why today’s debt interest is different from the previous 1991 record

Back in 1991, the U.S. economy was recovering from a recession and oil shocks from the Gulf War. The high demand for bonds at the time pulled yields down to about 8% for 30-year Treasuries, down from more than 10% in the previous decades.

Today, the picture is different, Doubleline argued. The government could handle a higher 8% interest rate when the debt was smaller, but that’s not the case now. In 1991, the debt held by the public was about 44% of the U.S. GDP; today, the debt held by the public has topped $32 trillion, more than 100% of GDP. That lower rate is still costing the government a greater share of its budget, because the debt itself has grown so much.

“The federal government has reached a record interest burden with the long bond nowhere near a record yield,” analysts wrote. “The yield itself might look ordinary by historical standards, but the government’s sensitivity to it is not.”

To make matters more complicated, major tech companies, particularly hyperscalers, are turning to debt markets, with AI giants issuing $225 billion in bonds in the first half of 2026. Not only may much of this capital expenditure worsen the national debt as much of these investments are tax-deductible, but it is bucking a trend of private companies borrowing less at times when the government is also borrowing heavily. The long-term capital needed for the AI buildout has tech giants flocking to 10-to-30-year bonds, straining U.S. finances and pressuring the U.S. government to pay higher yields to keep demand for bonds high.

“Capital flowing into corporate bonds is capital not flowing into Treasuries, and Treasury yields have had to rise to clear the market,” economist and Wall Street veteran Ed Yardeni wrote in a recent note. “In short, the AI revolution is producing a classic crowding-out effect, causing Treasury yields to rise.”

In an effort to steady the bond market, U.S. Treasury Secretary Scott Bessent doubled the size of the Treasury’s buybacks of 10-to-30-year bonds, from $2 billion to at least $4 billion per operation, a move that surprised investors and marked a rare direct intervention by the head of the Treasury. To Doubleline analysts, the strategy blurred the line between cash management and controlling the market—and showed just how critical a moment the U.S. is in regarding how it manages the interest on its debt.

“Net interest expense has already reached a record share of revenue, while the Treasury continues to finance large deficits in a market with heavy private demand for capital,” analysts said. “That makes the level of the long bond more consequential than the historical comparison alone suggests.”