Ferguson's Law
Published February 9, 2026
For the first time since 1934, US interest payments on the national debt now exceed annual defense spending, a reversal with profound implications for American power. History suggests that when great powers devote more resources to servicing debt than to sustaining military capability, decline becomes difficult to avoid.
From Habsburg Spain and revolutionary France to the Ottoman Empire and post–World War I Britain, rising debt burdens constrained defense, weakened deterrence, and accelerated geopolitical retreat. In each case, fiscal imbalance limited the ability to project power and respond to emerging threats.
Today, the United States faces a similar risk as entitlement-driven debt growth crowds out defense spending. Without meaningful fiscal reform, including changes to entitlement programs and debt management, America may find its global leadership increasingly constrained by the cost of past obligations rather than the demands of present security.
Learn more from Sir Niall Ferguson:
- Read "Debt Has Always Been the Ruin of Great Powers. Is the U.S. Next?" by Sir Niall Ferguson here.
- Watch GoodFellows, a podcast with Sir Niall Ferguson, here.
- Watch "Patterns of Power in Trump's Presidency" with Sir Niall Ferguson here.
Learn more about Sir Niall Ferguson here.
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The opinions expressed in this video are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University.
© 2026 by the Board of Trustees of Leland Stanford Junior University.
In 2024, the United States interest payments on its national debt exceeded $1.1 trillion, surpassing annual defense spending for the first time since 1934. By 2049, America's bloated debt fueled by rising entitlement costs such as social security and Medicare, is expected to widen the gap between debt, service and defens,e weakening the United States as a superpower throughout history, when great powers spend more on debt interest than on national defense, they don't stay great for very long. In 16th-century Spain, after decades of warfare and the costly administration of conquered territory payments on the empire's, long-term bonds jumped from 50% of revenue to 87% in only 20 years. This triggered multiple defaults on their debt, crippling Madrid's ability to maintain its armies and navy. Ultimately, the Spanish crown in its weakened state was forced to seed territories to France and grant both Portugal and the Netherlands their independence. Not long after France faced its own debt crisis following the war of the Austrian Succession, the seven years war and the American War of Independence, France's interest payments exceeded 50% of its budget. The resulting fiscal crisis led to the French Revolution in the fall of the Bourbon monarchy. The Ottoman Empire was spending 50% of its annual revenue on debt service default led to foreign control of Ottoman finances. This cut off their ability to modernize their military, earning them the reputation as the sick man of Europe before the Empire completely dissolved. In 1922 after World War I, Britain's interest payments soared to 7.5% of GDP versus 2.4% on defense. Those post-war fiscal constraints drove Britain's policy of appeasement with Hitler. By the time Britain did re-arm, it was almost too late. Today, the United States risks global decline and vulnerability from its rivals, unless it urgently addresses the federal debt with entitlement reforms and an irrational budget process as the essential first steps sustained. Defense spending is critical to deter authoritarian adversaries, but as the cost of debt service grows, resources for defense will inevitably get squeezed. History shows the dangers of violating Ferguson's law. America must get its fiscal house in order or risk losing its primacy and security in the world.