With the calendar year nearing its conclusion, the government is already operating within fiscal year 2026 for budgetary purposes. The Treasury Department has disbursed a sum with twelve figures to manage the country's outstanding obligations in just a few weeks. Unlike the standard calendar year, the government's fiscal year concludes at the close of September. Treasury figures indicate that over the past nine weeks, $104 billion has been allocated for interest payments on the nation's $38 trillion debt. This amounts to over $11 billion weekly, constituting 15% of the federal expenditure for the ongoing fiscal year.
TL;DR
- Treasury disbursed $104 billion for interest on $38 trillion debt in nine weeks, 15% of fiscal year expenditure.
- President Trump's tariffs aim to offset $3 trillion by fiscal year 2035, but CBO estimates are $1 trillion lower.
- Government borrowing is increasing, with the Peterson Foundation noting $158 billion more debt issued in the first half of this fiscal year.
- Deutsche Bank forecasts global economic expansion of 3.2% in 2026, but warns of escalating fiscal dangers and widening deficits.
Financial experts might anticipate the Treasury Department adopting some new objectives for the upcoming fiscal period: possibly reducing its debt accumulation and the subsequent interest expenses, or generating substantial income to counterbalance expenditures.
President Trump and his cabinet have been discussing debt more meaningfully in this administration. While economists say some of their methods are “peculiar,” the Oval Office has nevertheless devised some money-making schemes, like tariffs, estimated to offset $3 trillion through fiscal year 2035. This is, unfortunately, is $1 trillion lower than previous estimates from the Congressional Budget Office (CBO) earlier this year.
There’s also the issue of how much money will be left over to offset the debt from tariff revenue. Current estimations suggest that duties will bring in between $300 billion and $400 billion a year, which would help to pay a fraction of the yearly interest payments totaling more than $1 trillion in gross spending in 2025. However, President Trump has pledged to share proceeds from the tariff project with individuals, sharing a “dividend” of $2,000 per person. This, according to the Committee for a Responsible Federal Budget (CRFB), would cost $600 billion annually.
While money is coming in to help rebalance the books (unless it has already been spent, and more, on tariff rebate cheques), government borrowing doesn’t appear to be slowing. Last week, the Peterson Foundation, which lobbies for responsible fiscal action, published an analysis of the Treasury’s Quarterly Refunding process which shares government borrowing expectations. The foundation wrote that the government’s borrowing will go up, issuing $158 billion more in debt for the first half of this fiscal year compared to the same period a year prior.
Debt is a key risk for 2026
Regarding its outlook on global economic trends for the upcoming year, Deutsche Bank expresses a predominantly optimistic sentiment. The institution forecasts a worldwide economic expansion of 3.2% in 2026, anticipating that the American economy will grow by 2.4%. This economic uplift is attributed to diminishing trade uncertainties, according to the bank, which also noted that tax reductions enacted under Trump’s “One Big, Beautiful Bill” Act will provide financial relief to consumers.
However, deficits loom large, internationally, over that optimistic forecast. The organization stated: “Many countries face high deficits with limited fiscal and monetary ability. The expected structural shift towards fiscal impulse in 2026 will further widen deficits and heighten concerns around ongoing debt sustainability issues.”
The bank further stated that fiscal dangers are escalating, especially within the U.S.: “We expect 2026 deficit to reach 6.7%, with further widening if we see lower tariff revenues or more targeted fiscal stimulus that renews market concerns. Congress is also up against the clock to negotiate on healthcare subsidies and appropriations bills before the stopgap funding again expires on January 30.”
Authorities might also be relying on a redistribution of assets in the coming decades, which could be utilized to improve their financial standing. UBS projects that the Great Wealth Transfer will result in $80 trillion being exchanged over the subsequent 20 years. Certain analyses suggest an even greater sum, indicating that up to $124 trillion will be passed down will move from older individuals to their descendants.
And this new flow of wealth represents an opportunity for tax revenue, UBS’s chief economist Paul Donovan believes. “Governments have long mobilized private wealth to support public finances,” he told a media briefing last month. “There are several approaches. One is to influence market behavior—encouraging individuals to buy government bonds through incentives like tax-free premium bonds, which channel savings directly into state financing. Prudential regulation can also steer pension funds toward domestic government debt, as seen in the UK after 1945, when a debt-to-GDP ratio of 240% was successfully reduced over decades.”
He added: “More contentious options exist, such as taxing wealth through capital gains or inheritance levies. In practice, the initial focus tends to be on financial repression—using tax incentives or regulation to direct money into government bonds—before moving toward wealth taxation.”
