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The federal debt is big. But how big is too big? At time of this writing, it's $38 trillion and change. Is that too much? Who knows? The only practical way to understand it is to compare it with another number.
A popular approach is to compare it with Gross Domestic Product (GDP). These days, the national debt is around %119 of GDP. That seems... bad. Actually it's worse, because it's comparing the money the federal government borrowed, with the goods & services everyone produces. If we compare the national debt to just the revenue the federal government collects, it's more like 600%. But is it too much? Who knows?
Another approach is to compare it with the population of the country, which is around 343 million souls. This is north of $111,000 for every man, woman, and child. Got a family of four? Your share of the national debt is $444,000. It's not just bad... it's personal. Again, is it too much? Who knows?
We now propose a more useful number — debt service portion:
• The amount the federal government pays out in interest every year.
• Compared with the total revenues the federal government collects every year.
For example, back in fiscal year 2015, the federal government collected $3.98 trillion, but paid out $402 billion in interest on its debt, or 10.1%.
Debt service portion is useful in that it answers the question: how big is too big? Well, when it reaches 100%, it's definitely too big. At that point, every dollar the federal government collects is paid out in interest. Nothing is left over to pay the military, welfare, transportation, etc. Basically we're done as a nation. Mexican cartels invade and take over, because the Canadiens are busy playing the Maple Leafs.
Another nice feature: the debt service number automatically accounts for inflation. As inflation occurs, revenues are received in inflated dollars, but interest is also paid out in inflated dollars. So inflation conveniently cancels out.
Here's the historical data:
| Fiscal Year | Interest (billions) |
Revenue (trillions) |
Debt Service Portion |
|||
|---|---|---|---|---|---|---|
| 2010 | $414 | $2.94 | 14.1% | |||
| 2011 | $454 | $3.06 | 14.8% | |||
| 2012 | $360 | $3.16 | 11.4% | |||
| 2013 | $416 | $3.56 | 11.7% | |||
| 2014 | $431 | $3.73 | 11.5% | |||
| 2015 | $402 | $3.98 | 10.1% | |||
| 2016 | $433 | $3.96 | 10.9% | |||
| 2017 | $459 | $4.10 | 11.2% | |||
| 2018 | $523 | $4.15 | 12.6% | |||
| 2019 | $575 | $4.26 | 13.5% | |||
| 2020 | $523 | $4.24 | 12.3% | |||
| 2021 | $562 | $4.91 | 11.5% | |||
| 2022 | $719 | $5.76 | 12.5% | |||
| 2023 | $883 | $5.47 | 16.1% | |||
| 2024 | $1,133 | $5.90 | 19.2% | |||
| 2025 | $1,220 | $6.30 | 19.4% | |||
| Source: see notes at bottom | ||||||
How far along the path to doom are we? Answer: 19.4%. The federal government is paying out almost a dollar for every five dollars it collects.
How did we get here? In FY 2021, debt service portion was 11.5%. Then interest paid on the debt doubled over the subsequent three years, from $562 billion to $1.13 trillion. During the same period, revenues increased by only 20%. Ouch.
A major culprit was that the average interest rate the government was paying rose significantly over that time. Though it was not the case that the rate rose to extraordinary heights — in FY 2024 it was a modest 3.3%. Rather the rate had gotten down to an extraordinarily low 1.6% back in FY 2021. Apparently the federal government got addicted to those low rates, failed to get its fiscal house in order, and when the rate climbed back up, interest payments exploded.
By the way, in order for the average rate to climb that fast, much of the debt with low rates must have been short-term bonds. So when they needed to be rolled over, all of a sudden a low rate became whatever the market demanded. A foreseeable problem, but here we are.
Now, a clever person might point out that a portion of the national debt is "intragovernmental debt." On its face, this is money the federal government lent to itself. So we can extinguish those obligations for free, right? Well, most of it is the Social Security Trust Fund and the Medicare Trust Fund. Remember the ad showing Paul Ryan dumping Grandma off a cliff? Yeah, not gonna happen.
Furthermore, interest payments on intragovernmental debt have been declining as those trust funds dwindle. In FY 2010, such payments were 49% of total interest payments. Today they are 20%. No need to murder something that's already commiting suicide.
By the way, this means that non-intragovernmental debt, or "debt held by the public," or "debt for no particular reason," is growing faster than the table above indicates. But we digress.
We might ask, why keep adding to the national debt? We're not at war.
If one adopts the view that a key use of money by Congress and the president is the buying of votes, the debt explains itself. They'll spend whatever money the government brings in, then borrow more and spend that too. Even if a particular iteration of Congress was seized with a selfless regard for the national good, the next Congress would certainly say thank you very much, and buy more votes with the windfall. As long as federal revenues grow as fast as interest payments, the game can be sustained indefinitely.
However, math is a harsh mistress. When one plays roulette with exponential curves, things can get out of hand in a hurry.
Keep an eye on that debt service portion — 19.4%.
Interest payments are taken from this dataset:
Interest Expense on the Public Debt Outstanding
Revenue is taken from this dataset:
U.S. Government Revenue Collections
Debt service portion is calculated using the mathematical "division" operation.
Home Rules Play! Tactics Notes Contact
Written The Book Various & Sundry
Copyright 2025 Jim Swift