THE NATIONAL DEBT AND THE COST OF EVERYTHING RISING FEDERAL DEBT QUIETLY DRIVES UP HOUSEHOLD COSTS THROUGH HIGHER INTEREST RATES.

The following information was released by the Independent Institute:

By Craig Eyermann

February 10, 2026

How much more are you paying for everything because of the U.S. government's excessive spending?

Writing at The Hill, economist Rachel Greszler starts with just the cost of paying interest on the national debt and expresses what that means in terms of average household expenses:

U.S. consumers paid $160 billion in credit card interest in 2024, averaging just under $1,200 per household. That's a lot of money, but it's only one-sixth as much as the $1.028 trillion we paid in net interest on the federal debt in fiscal 2025.

At $7,600 per household, interest on the federal government's debt costs more than the average household spent on retirement contributions ($1,991), gas ($2,411), healthcare ($6,197) or groceries ($6,224) in 2024. Even as housing costs have surged, federal borrowing is costing Americans the equivalent of three and a half months of mortgage or rent payments.

That's a lot of money for a household. Greszler, a former senior economist on the staff of the U.S. Congress' Joint Economic Committee, argues that Americans are paying higher costs because of it. She takes advantage of new study findings by analysts at the Federal Reserve to estimate how much more things cost today because Washington D.C.'s politicians and bureaucrats can't get their fiscal act together.

Americans are already paying higher interest rates on everything from home mortgages to small business loans to credit cards, because, as the Congressional Budget Office has explained, when federal borrowing increases, "the amount of funds available for private investment would decline (a phenomenon known as crowding out), and interest costs would increase."

A 2025 Federal Reserve Bank of Dallas analysis estimated that each increase of 1 percentage point in the federal debt-to-GDP ratio raises long-term borrowing rates by about 3 basis points. Since 2007, the federal debt-to-GDP ratio has increased by 64.7 percentage points, implying an increase of roughly 194 basis points in borrowing costs.

Private borrowing rates don't perfectly track treasury rates they're usually higher and swing more but for comparison's sake, a 194-basis-point increase translates into real dollars: $4,700 more per year in interest on a median-priced ($410,800) home mortgage; roughly $3,100 more in interest on a three-year, $100,000 small-business loan; and about $2,700 more in interest on a five-year, $50,000 auto loan.

If you borrow to buy any of these things, or really, if you borrow to buy anything, you're effectively paying a stealth tax. It's a hidden cost imposed on your household's wealth by Washington D.C. politicians who refuse to restrain their spending ambitions. Americans are poorer today than they would otherwise be because politicians haven't.

Greszler does offer a solution: If federal policymakers want to make life more affordable, both now and in the future, they should cap their own spending.

Yes, they should. Unlike tax collections, politicians and bureaucrats have 100% control over how much money they spend and borrow. Reducing the growth of their spending is the only sure way they have to improve the U.S. government's fiscal situation. It's a pure bonus that action would also make many household expenses less costly.