Since that survey’s release, the picture’s deteriorated at a far faster pace than the Congressional Budget Office and private forecasters anticipated, due in part to the coming tax rate reductions and spending increases embodied in President Trump’s One Big Beautiful Bill. The single major line item that’s now growing fastest, and that has added the most to the budget shortfall since start of the pandemic, is a dark horse: interest expense. This burgeoning cost that contributes nothing toward supporting national defense, funding the nation’s promises on delivering health care for seniors, and funding border control, is the one budget feature most likely to increasingly outrage the folks. Recall that in the 1992 presidential race, independent candidate and political unknown Ross Perot made the exploding interest on the national debt a centerpiece of his maverick campaign and captured nearly 20% of the popular vote, thanks in large part to hammering home the looming danger ahead.

Since 2019, interest on the debt has exploded

In the 2019 fiscal year, net interest expense was still no big deal. It totaled just $375 billion, accounting for a modest 1.7% of GDP. By FY 2025 (ended in September), the figure had jumped to $952 billion, a rise of 153%, or 17% a year. In that same six-year period, its trajectory far outstripped the still alarming surges in Medicare (25%) and Medicaid (32%), not to mention national defense (7%). In FY 2025, interest ranked as the third-largest spending area after Social Security, and nearly caught Medicare, which at $997 billion was less than 5% ahead of debt service. Interest gobbled 3.2% of national income, almost twice its share pre-COVID.

From FY ’19 to FY ’25, interest soared from under one dollar in 10 to more than one dollar in six-and-a-half of all U.S. spending.

The ramp only accelerated from October through December, the first quarter of FY 2026. Interest expense hit $179 billion, versus $160 billion in the first three months of FY 2025. For that period at the close of last year, it towered as the nation’s second-largest expenditure, narrowly beating both Medicare and national defense. In its most recent long-term budget projections, the CBO estimates that interest will keep gobbling more and more of national income, going from today’s 3.2% by 4.0% by 2034. At that level, interest costs would reach $1.6 trillion—almost 70% more than today—and replace Medicare by a hair as the budget’s second-highest cost. At that point, interest would be absorbing the equivalent of one in four dollars collected in all individual income taxes.

It’s the basic, “primary” deficit that’s causing the jump in interest costs

The interest takeoff arises from a fundamental problem. The underlying source is the “primary” deficit, the structural gap between revenues and outlays that that creates big shortfalls before counting interest expense. As the primary deficit grows, the U.S. must borrow the expanding difference, and that’s been the story. Adding to the pain: As the principal amount owed has kept expanding, so too has the cost of financing each new billion dollars added to the tab. Since 2019, the average rate on U.S. debt has risen substantially, from a super-bargain 2.49% seven years ago, to 3.35% in FY 2025. And it’s only at its current range in the mid-3’s because the U.S. is relying heavily on short-term borrowings to hold down the overall expense, meaning that if the Treasury wants to reduce risk by refinancing that debt with 10-year or even longer-duration bonds, the rates it pays to rise well beyond the current numbers, hiking total interest expense even more.

As the gulf between what the U.S. spent and collected kept waxing, interest became a bigger and bigger contributor to the deficits that now raise such dread. The shortfall between revenues and expenses vaulted from $998 billion in 2019 to $1.8 trillion in FY 2025. That’s a leap of $800 billion, or 80%. In that span, interest added $577 billion to the federal budget, accounting for roughly 70% of the notorious deficit. The CBO projects that under current law, the gap will zoom to $1 trillion in FY 2025, a staggering 6% of GDP, to 117% in 2034. The agency forecasts that interest will join Medicare as the top drivers of that 17-point advance.

It’s important to note that the additional tariffs imposed by the Trump administration, though a significant fundraiser, haven’t come close to slowing that growing “V” between receipts and spending. Interest is a big part of the story. In FY 2025, the U.S. raised around $200 billion from import duties and associated revenues, some $125 billion more than the previous fiscal year. In the same interval, interest expense grew from $881 billion to $952 billion. That extra $71 billion offsets almost 60% of the gains from tariffs.

All told, debt service is claiming an ever-greater share of the dollars America has promised to spend on benefits for future generations. Those payments hogging more and more of our tax dollars are the price we’re paying for years of overspending and under-taxing. If anything decisively gets American voters to focus on the damage from debt and deficits, it’s the ravages of Big Interest.

With 52% of U.S. workers now saying they are hybrid workers, according to a recent Gallup poll and real- estate dealmaking having slowed, experts say that the industry is facing a demand shift that landlords can’t afford to ignore. Chase Garbarino is CEO of HqO, a software company that works across more than one billion square feet of office space globally and tracks the effectiveness of office amenities. He told Fortune that the number one rule of real estate remains location, location, location, but there are new rules for offices.

“The fact that the genie is out of the bottle on hybrid means there’s going to be a lot of structural changes in how landlords need to operate their business models,” Garbarino told Fortune. “The whole industry is kind of predicated upon the 10-year-plus lease as the one product skew that they want. They’re going to have to think and act a lot more like hotels.”

The 10-year lease provides guaranteed long-term financial stability for landlords, handing them a predictable cash flow and minimized turnover costs. Yet that model, Garbarino says, has been upended by the rise of hybrid work because employers aren’t committing to 10-year leases as much as they used to. He says landlords must win tenants back, guaranteeing luxuries and services that can keep them long-term.

A K-Shaped Office Economy

A 2025 analysis by brokerage JLL and Commercial Observer found that lease length has diverged among sectors. The average lease term among financial services companies was 7.6 years, shrinking to 5.3 years for tech firms, and to just 3.5 years for AI startups. Even for Class A space, or the most prestigious real estate, leases were growing shorter.

“They have to earn the people back time and time again,” Garbarino said.

Amid return to work mandates, Manhattan’s luxury real estate market is on the rise among financial services, legal, and technology companies. The number of leases signed for Manhattan office space worth $100 per square foot reached an all-time high in 2025, according to reporting from the Financial Times. There were 313 leases signed at a price of at least $100 per square foot last year, up from 212 in 2024, nearly a 50% increase year over year, according to data from brokerages JLL and CBRE.

Companies like JPMorgan Chase have cashed in on luxury. In October, JPMorgan announced a move to 270 Park Ave. a $3 billion, 60-story office space—of which the company owns—equipped with all the furnishings of a luxury resort spa, from hot and cold plunges and meditation rooms, to 19 restaurants and an assortment of coffee shops. 

But that transformation is not limited to New York. Companies across the U.S. are going all in on luxurious amenities for its employees. Larry Ellison’s Oracle—which is slated to take over U.S. operations of TikTok—is constructing a 70-acre tech campus in Nashville that will function as a town of its own, and will include a high-end Nobu restaurant and a hotel.

While Garbarino notes that nap pods are currently the most booked amenity at a building adjacent to JPMorgan’s headquarters, he maintains that amenities alone aren’t enough to drive workers back to the office. “All we’re really seeing in commercial real estate is that frankly space is a commodity,” he said. “Location is still important. It’s not enough of a differentiator.”

Instead, he argues that their effectiveness often depends on the office policy, and that amenities help to create a healthy environment for those required to be in the office full-time, rather than acting as the primary draw themselves. “These things are going to be the balancing factor,” Garbarino said. “If you’re going to work all day and night and be here all the time, we want to balance it with a healthy work environment.”

In the early 1990s, Newsom’s career began not at a campaign office, but in a wine shop on San Francisco’s Fillmore Street called PlumpJack, a venture he launched with backing from the Getty fortune. Oil heir and composer Gordon Getty, a close family friend who once said he treated Newsom like a son—just as he had been treated similarly by Newsom’s father. In fact, to call Newsom’s father, William Alfred Newsom III, a lawyer for the Getty family would be an understatement. The future judge once hand-delivered $3 million to the Italian kidnappers of Getty’s grandson, in 1973, CalMatters reported, while noting deep ties also between the Newsom family and other San Francisco political royalty, the Browns and Pelosis.

That relationship went far beyond a single store. Getty invested in most of Newsom’s early businesses—wineries, restaurants, and hotels that steadily expanded the PlumpJack brand and turned the young entrepreneur into a multimillionaire long before he was sworn in as governor. Members of the Getty clan would later emerge as some of Newsom’s most reliable political donors, contributing hundreds of thousands of dollars to his campaigns.​ And yet Newsom’s story is not straightforwardly one of extreme wealth.

Raised by a mother with 3 jobs

After Newsom’s parents divorced when he was a toddler, he and his sister were largely raised by their mother, Tessa, a young single parent in San Francisco who, at times, worked three jobs—as a secretary, waitress, and paralegal—to support her children.​

Family members recall their mother sleeping in the dining room of a small flat and renting out a bedroom to another family to make rent, even as their father—a politically connected judge who once managed the Getty family trust—exposed the children to a very different world. Newsom has said his mother taught him everything he knows about grit and hard work, even as he navigated his own struggles with dyslexia and a school system that often left him behind.​

A wealth tax fight that cuts both ways

Those dual identities—billionaire-backed businessman and son of a hustling single mom—are colliding in California’s escalating fight over a proposed “billionaire tax.” The 2026 Billionaire Tax Act, championed by a powerful health care workers’ union, would impose a one‑time 5% levy on the assets of residents worth more than $1 billion, payable over several years and calculated on wealth held at the end of 2026.​

Supporters say the measure is aimed squarely at the kind of extreme fortunes that helped launch careers like Newsom’s, promising tens of billions for public services they argue have been starved by federal tax cuts and rising inequality. Union leaders frame it as a moral corrective: In a state where billionaires buy oceanfront compounds, working‑class Californians crowd into spare rooms like the one Newsom’s family once rented out.​

Newsom’s uneasy stance

Newsom has not embraced the proposal; he has become one of its most prominent critics. Calling the one‑time levy “really damaging,” “bad economics,” and a threat to California’s long‑term fiscal health, the governor argues a state‑level wealth tax could accelerate an exodus of billionaires and their businesses, eroding future income‑tax revenue that funds schools, health care, and social programs.​

He has said he is open to a national conversation about taxing wealth, but insists California alone cannot afford to experiment when it already relies heavily on volatile income taxes from the rich. Behind the scenes, he has lobbied union allies to abandon the initiative, warning the backlash from nervous investors—some already moving money and operations out of state—could outlast any short‑term cash infusion.​

For Newsom, the wealth‑tax battle is more than a clash of spreadsheets and slogans: It is a confrontation with his own origin story. The same billionaire class that seeded his first business and boosted his campaigns now stands in the crosshairs of a tax he says could hurt the state he governs, even as memories of a mother stringing together three paychecks shape his instincts about inequality and opportunity.​

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.