U.S. Now Spends More on Debt Than Defense — What It Means for You

Why the Government Is Spending More on Debt Than Defense

Did you know the U.S. government now spends more money on debt than it does on the military? That’s right. In 2025, the government is spending about $1.1 trillion just on interest—not even paying off the actual debt. That’s more than the budget for defense.

Let’s break down what this means, why it matters, and what could happen next.

What Is Federal Debt?

Federal debt is the money the U.S. government borrows to pay for things like roads, schools, healthcare, and the military. When the government doesn’t collect enough in taxes to pay for everything, it borrows money to cover the rest. This borrowed money becomes part of the national debt.

Right now, the national debt is over $34 trillion. That’s a huge number—and it’s still growing.

What Is Interest on the Debt?

Interest is the cost of borrowing money. Just like how a credit card charges you interest if you don’t pay it off right away, the U.S. government pays interest on the money it borrows. And because the government has borrowed so much, the interest bill is now one of its biggest expenses.

In fact, the $1.1 trillion in interest payments this year is more than the country spends on national defense. That means we’re spending more on debt than on keeping the country safe.

Why Are Interest Costs Going Up?

There are a few reasons why this is happening:

1. High Interest Rates:
   The Federal Reserve raised interest rates to help fight inflation. That makes it more expensive for the government to borrow money.
2. More Debt:
   Every year, the government adds more to the debt. That means more money borrowed—and more interest to pay.
3. Bigger Budget Deficits:
   When the government spends more than it earns in taxes, it creates a budget deficit. These deficits add to the debt pile, which increases interest costs.

So, even if the government doesn’t spend more, the cost of just carrying the debt keeps growing.

Why Should You Care?

You might be wondering, “Why does this matter to me?”

Here’s why it matters:

• Less Money for Programs:
  If more of the budget goes to interest, there’s less money for schools, roads, Social Security, and healthcare.
• Higher Taxes in the Future:
  To keep up with debt payments, the government may have to raise taxes later on.
• Slower Economy:
  When the government borrows too much, it can hurt the economy and slow down job growth.

This isn’t just a problem for Washington, D.C.—it can affect families, workers, and small businesses everywhere.

How Do Taxes Play a Role?

Some lawmakers want to cut taxes to help people and businesses. While tax cuts can be helpful, they also reduce the amount of money the government collects.

When tax cuts aren’t matched by spending cuts, the government ends up borrowing even more money. That adds to the debt and increases interest payments.

Experts warn that new tax cuts could make the debt problem worse unless they’re carefully planned.

What Are the Choices Ahead?

The government has some tough choices to make:

1. Raise Taxes:
   This can bring in more money, but it may not be popular with voters.
2. Cut Spending:
   This would mean reducing budgets for programs, which could affect millions of people.
3. Change the Tax Code:
   Lawmakers could find ways to close loopholes and make the system fairer without raising rates too much.
4. Do Nothing:
   If nothing changes, the debt and interest costs will keep growing, and the problem will get worse.

What Could Happen If We Do Nothing?

If the debt keeps growing and interest payments stay high, it could lead to:

• Lower Credit Ratings:
  If lenders think the U.S. can’t manage its debt, they might raise rates even more.
• More Inflation:
  Too much borrowing can cause prices to go up.
• Weaker Dollar:
  If people lose faith in the U.S. economy, the value of the dollar could drop.
• Less Room for Emergency Spending:
  In a crisis—like a pandemic or natural disaster—the government may have fewer resources to respond.

That’s why many experts say it’s time to make a plan.

How Can a CPA Help?

You might be thinking, “This is a government problem—what can I do about it?”

Actually, there’s a lot you can do—especially with the help of a Certified Public Accountant (CPA).

Here’s how we can help:

• Plan for Higher Taxes:
  We can help you prepare in case tax rates go up in the future.
• Use Smart Deductions:
  We find legal ways to lower your tax bill—without adding to the federal debt.
• Retirement Planning:
  If government programs like Social Security change, having a strong retirement plan will help you stay on track.
• Business Guidance:
  We help small businesses manage their finances wisely during times of uncertainty.

Final Thoughts

The rising cost of federal debt is a serious issue. For the first time ever, the U.S. is spending more on interest than it does on national defense. That’s a sign that the debt is becoming a major burden.

Whether you’re a worker, parent, retiree, or small business owner, this affects you. And while we can’t fix the national debt ourselves, we can prepare for what’s coming.

Now is the time to get ahead of the changes, adjust your financial plans, and make sure your money is working for you—not just going to taxes or debt.