WASHINGTON DC — The United States is heading toward a fiscal reality that’s easy to understand—but hard to fix.

Imagine a family that maxes out its credit cards—then reaches a point where it’s spending more on interest payments than on groceries.

That’s where the federal government is headed.

Within the next decade, the U.S. is projected to spend more than $1 trillion a year on interest—roughly $3 billion every single day.

That money doesn’t build roads, fund defense or support healthcare. It goes to paying off past debt.

And economists warn that shift could begin squeezing federal investments that states like Michigan rely on.

What’s Driving America’s Debt — In Plain English

Here’s where the debt is coming from:

Tax Cuts

The Tax Cuts and Jobs Act reduced government revenue
Added roughly $1.5T–$2.5T to the debt (including interest)

Aging Population

More retirees = higher Social Security and Medicare costs
👉 Biggest long-term driver

COVID Spending

Trillions spent to stabilize the economy
Rapidly increased total debt

Interest Costs

Higher rates = more expensive borrowing
Fastest-growing part of the budget

Bottom Line

Even without tax cuts, the U.S. would still face rising debt.

But with them, the problem is trillions of dollars larger—and growing faster.

A Perfect Storm Years in the Making

Budget experts say the debt surge is not driven by a single policy, but by several forces converging over time.

One major factor: the Tax Cuts and Jobs Act, signed by President Donald Trump, which reduced federal revenues.

“The 2017 tax cuts reduced revenues relative to what they otherwise would have been,” said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget.

In simple terms: If those tax cuts had never passed, the U.S. would likely have $1.5 trillion to $2 trillion less debt over time—potentially closer to $2.5 trillion when interest costs are included.

That doesn’t mean the debt problem would disappear.

It means it would be smaller—but still growing, driven by other forces.

The Bigger Driver: Rising Mandatory Spending

Programs like Social Security and Medicare continue to expand as the population ages and healthcare costs rise.

“The major drivers of long-term debt are the aging of the population and rising healthcare costs,” said Phillip Swagel, director of the Congressional Budget Office.

These programs now account for the largest share of federal spending—and they grow automatically each year.

COVID Spending Accelerated the Trend

The federal government added trillions in debt responding to the pandemic under both Donald Trump and Joe Biden.

“We borrowed a lot of money during the pandemic, and now we’re dealing with the consequences of that,” said Maya MacGuineas.

The Fastest-Growing Threat: Interest Costs

What makes today’s situation more urgent is rising interest rates.

As borrowing becomes more expensive, debt payments surge.

“We are on an unsustainable fiscal path,” MacGuineas said. “Interest costs are one of the fastest-growing parts of the budget and will soon exceed spending on many major programs.”

What $1 Trillion in Interest Really Means

Unlike most government spending, interest payments do not build anything or provide services.

They go to investors, pension funds and foreign governments that hold U.S. debt.

“It means fewer resources are available for public investment,” Swagel said. “That can have long-term consequences for economic growth.”

Why Michigan Is in the Crosshairs

For Michigan, that squeeze could be significant.

The state depends heavily on federal funding for:

  • Defense and advanced manufacturing
  • Infrastructure projects
  • Healthcare systems
  • Economic development tied to the auto industry’s EV transition

If more federal dollars go toward interest payments, less may be available for those priorities.

A Political Problem With No Easy Fix

Fixing the debt would likely require politically difficult choices:

  • Cutting spending
  • Raising taxes
  • Reforming entitlement programs

“Both parties have contributed to the debt,” MacGuineas said. “And both will need to be part of the solution.”

The U.S. debt crisis is no longer abstract.

As interest payments approach $1 trillion annually, the federal government is increasingly spending money on the past—rather than investing in the future.

And for states like Michigan, that shift could have real economic consequences.