Two months into the new fiscal year, and the government is already spending $10 billion a week on servicing national debt | Fortune
The calendar year may have a few weeks left, but from the government’s budgeting perspective, we’re in fiscal 2026. In just a few weeks, the Treasury has already disbursed a triple-figure sum to cover the nation’s debt costs. Unlike the calendar and tax years, the government’s financial year ends in September. Data from the Treasury show that in the nine weeks since the year started, it has paid $104 billion in interest on a $38 trillion borrowing load. That works out to more than $11 billion per week and already accounts for about 15% of federal spending in this fiscal year.
Economists hope the Treasury will set some New (fiscal) Year’s goals: perhaps to curb borrowing and the resulting interest payments, or to drum up substantial revenue to offset those costs.
Within the Trump administration, debt has become a more prominent topic. While some economists describe certain approaches as unusual, the White House has nonetheless pursued revenue-generating ideas, such as tariffs, which the administration says could offset about $3 trillion by fiscal year 2035. That figure is, however, roughly $1 trillion lower than earlier estimates from the Congressional Budget Office.
There’s also uncertainty about how much tariff revenue will actually offset debt. Projections place duties at roughly $300–$400 billion annually, which would only cover a fraction of the more than $1 trillion in gross interest payments projected for 2025. President Trump has pledged to distribute tariff proceeds to individuals, using a $2,000 per person “dividend.” According to the Committee for a Responsible Federal Budget, this plan could cost as much as $600 billion each year.
Even as revenue from tariffs looks helpful, government borrowing doesn’t appear to slow. Last week, the Peter G. Peterson Foundation, which advocates responsible fiscal policy, published an analysis of the Treasury’s Quarterly Refunding process. It indicated borrowing will rise, with the government planning to issue about $158 billion more in debt in the first half of the current year than in the same period a year ago.
Debt as a 2026 risk
Deutsche Bank’s macro view for global economics next year is broadly optimistic. It anticipates global growth of about 3.2% in 2026, with the U.S. economy expanding around 2.4%. A reduction in trade uncertainty and a boost from tax cuts under Trump’s proposed “One Big, Beautiful Bill” could lift households.
Yet, deficits loom large on a global scale, casting a shadow over the rosy outlook. Deutsche Bank notes that many countries face sizable deficits with limited fiscal and monetary tools to address them. The expected shift toward greater fiscal stimulus in 2026 could widen deficits further and raise worries about debt sustainability.
In the United States, fiscal risks are rising. The bank projects the 2026 deficit at about 6.7%, with further widening if tariff revenues fall or additional targeted stimulus is enacted, which could reignite market concerns. Congress also faces a deadline to resolve healthcare subsidies and funding for appropriations before another stopgap measure expires at the end of January.
A potential long-term revenue stream could come from the so‑called Great Wealth Transfer. UBS projects that as much as $80 trillion—some analyses estimate up to $124 trillion—will pass from older generations to younger ones over the next two decades.
That wealth transfer could become a tax revenue lever, according to UBS chief economist Paul Donovan. Governments have historically mobilized private wealth to support public finances. Potential strategies include nudging market behavior to favor government bonds through incentives like tax-free savings, directing pension funds toward domestic government debt through prudential regulation, and, more controversially, imposing wealth taxes or higher capital gains taxes. In practice, many policymakers first explore financial repression—using tax incentives or regulation to channel savings into government bonds—before considering broader wealth taxation.
