US debt servicing costs skyrocketed in Q3 as the rate shock propagated to the $31 trillion worth of federal debt, a number that continues to grow at a $1.5 trillion per year clip. Because of the high debt base, any small changes in average financing rate has a huge impact on ultimate debt costs to the government.

This number will only worsen as we continue to retire cheaper old debt and replace it with costlier new debt.

If the current ~4.5% average yield curve rate propagates to all $31 trillion worth of debt, we are looking at $1.4 trillion per year just in interest payments. This would be 29% of the 2022 FY total Federal tax receipt.