Let’s take a step back and look at the big picture so we can assess the US government’s financial situation, where it’s likely headed, and what these trends could mean.
Observation #1: It’s Politically Impossible To Cut Spending
Among the biggest expenditures for the US government are so-called entitlements like Social Security and Medicare.
It’s unlikely any politician will cut entitlements. On the contrary, I expect them to continue growing.
That’s because tens of millions of Baby Boomers—about 22% of the population—will enter retirement in the coming years. Cutting Social Security and Medicare is a sure way to lose an election.
The interest on the federal debt is already the second-largest federal expenditure. In a matter of months, it’s set to exceed Social Security and become the biggest expenditure.
With the most precarious geopolitical situation since World War 2, National Defense—another large expenditure—is unlikely to be cut. Instead, defense spending is all but certain to increase. President Trump has proposed increasing it from $917 billion to $1.5 trillion. The ongoing war with Iran guarantees military spending has nowhere to go but up, way up. The Pentagon has requested an additional $200 billion for starters for the Iran war.
Different types of healthcare and welfare programs also make up a considerable part of the federal budget and are unlikely to be cut.
In short, efforts to reduce expenditures will be meaningless unless it becomes politically acceptable to make chainsaw-like cuts to entitlements, national defense, and welfare while reducing the national debt to lower the interest cost.
In other words, the US would need a leader who—at a minimum—returns the federal government to a limited Constitutional Republic, closes the 128 military bases abroad, ends entitlements, kills the welfare state, and repays a large portion of the national debt.
However, that’s a completely unrealistic fantasy. It would be foolish to bet on that happening.
Here’s the bottom line.
The government cannot even slow the spending growth rate, let alone cut it.
Expenditures have nowhere to go but up—way up.
Observation #2: Ever-Increasing Debt Is the Only Way To Finance Deficits
When faced with a choice, politicians always choose the most expedient option.
In this case, that means issuing more debt rather than making tough budget decisions or explicitly defaulting.
Consider the recurring debt ceiling farce in the US Congress, which has been raised over 100 times since 1944.
In any case, don’t count on increased tax revenue to offset these increases in federal expenditures.
Even if tax rates went to 100%, it still wouldn’t be enough to stop the debt from growing.
According to Forbes, there are around 902 billionaires in the US with a combined net worth of about $6.8 trillion.
The US federal government spent around $7 trillion in FY 2025, and will almost certainly spend a lot more in FY 2026 and beyond.
Even if the US government confiscated 100% of billionaire assets through a wealth tax, it wouldn’t cover even a single year of current federal spending.
And even after confiscating all billionaire wealth, the US government would still have to borrow more than $200 billion to cover FY 2025 spending.
Here’s the bottom line: increasing taxes, even to extreme levels, isn’t going to change the trajectory of this unstoppable trend—even slightly.
The truth is, no matter what happens, the deficits will not stop growing, nor will the debt needed to finance them.
The growth rate is not even going to slow down. It’s going to increase.
That means interest expense on the federal debt will continue exploding higher.
Observation #3: Over Half of US Treasury Debt Matures by 2028
This year, nearly $10 trillion of US Treasuries will mature.
And every bond that comes due has to be refinanced at today’s much higher rates—locking in substantially larger interest costs for years. What used to roll over quietly can now only be rolled over at roughly double the interest cost seen in 2022.
That’s what the chart below is really showing: the easy-money era is over. The “free money” party ended, and now the bill for the last round of stimulus has to be carried—and paid.
More than half of America’s debt will mature by 2028.
Every time US debt is refinanced at higher rates, it adds interest costs to the deficit—costs that have to be financed with even more debt issuance, compounding the problem.
It’s worth noting that about $6.6 trillion of the $9.6 trillion maturing this year—roughly 69%—are short-term T-bills.
That’s typical in a debt crisis. As demand for long-term bonds weakens, investors gravitate to short-term instruments like T-bills instead of 10-year notes and 30-year bonds.
It’s the same pattern you see in emerging-market crises. The market shortens maturities as conditions deteriorate. Only a fool would want to lend a bankrupt government money for the long term.
Observation #4: An Ever-Growing Interest Expense Fuels the Debt Spiral
Annualized interest on the federal debt exceeds $1.2 trillion and is surging higher. That means more than 23% of federal tax revenue is going just to service interest on the existing debt.
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