The federal debt: what Texas pays, and why the system is unsustainable

This is the finding our opponents least want examined.

What staying in the Union costs Texans right now

Texans pay about 8.2 percent of all federal taxes, their share of IRS gross collections, verified against USAFacts at 8.2 percent of 5.07 trillion dollars in 2024. Run that share against Washington's books, which are published to the penny by the Treasury:

The 72 billion in interest and the 78 billion primary deficit are the two halves of the 150 billion, not amounts on top of it. The primary half financed federal spending, some of it in Texas. The interest half financed nothing. Washington now borrows even to pay it.

That 72 billion a year in interest buys Texas nothing. Not a road, not a base, not a benefit. It services Washington's past borrowing, full stop. It has more than doubled since 2019, when it was around 31 billion, and on the FY2025 books it has climbed again, to roughly 80 billion of interest inside a Texas deficit share of about 147 billion. In the federal budget as a whole, interest is now the second-largest line, ahead of all defense and ahead of all Medicare, behind only Social Security. Every Texan works part of every year just to pay the interest on debt somebody else ran up, and most of the fresh borrowing done in their name now goes to exactly that.

And the clock is the story. The federal debt crossed 39 trillion dollars on March 17, 2026. It climbs about 5 to 6 billion dollars a day. On the current pace it passes 40 trillion in October 2026, before Texans vote in November, and there is no debt-ceiling fight to slow it, because Congress raised the limit above 41 trillion in the summer of 2025. Texas's share of the whole pile is about 3.24 trillion and rising every day the state stays in.

One more thing about that borrowed money, and it is not that Washington wastes it, because every government wastes some. It is that Washington cannot tell you what it did with it. By its own books the federal government made 162 billion dollars in improper payments in fiscal 2024, and about 2.8 trillion since 2003, and the Government Accountability Office, Congress's own auditor, estimates it loses another 233 to 521 billion dollars a year to fraud. Texas funds about 8.2 percent of all of it, so on the order of 13 billion dollars a year in improper payments, and another 19 to 43 billion in fraud, is borrowed in Texans' name on money that has to be paid back with interest. None of that is a new cost on top of the figures above. It is simply what a slice of the spending already counted turns out to be. And the Defense Department, the largest single thing those taxes buy, has now failed eight audits in a row and has never once passed, so the books on it cannot be independently verified at all. Texans borrow it, pay the interest on it, fund the part that cannot be audited, and get no vote to change any of it. There is a plain measure of the difference. Texas closed its own most recent books with a clean audit opinion. Washington has never once earned one.

The structure is unsound, and its own auditors say so

Step back from what the debt costs Texas and ask the colder question. Is the thing itself sound? Its own managers have answered in writing. Every year the Treasury publishes an audited Financial Report of the United States Government, and for years now it has carried a section under a heading that is not ours but theirs: an unsustainable fiscal path. The FY2025 edition states it flatly, that current policy is unsustainable because spending and revenue are structurally out of balance, and the Government Accountability Office, which audits the books, calls for urgent and sustained action to change course. When the bookkeeper writes "unsustainable" across the ledger, that is not an opponent's talking point. It is a confession.

The market reached the same verdict. The United States long carried the top credit rating from every major agency. That era is over. Standard and Poor's cut it in 2011, Fitch in 2023, and in May 2025 Moody's, the last holdout, withdrew the Aaa it had granted without interruption since 1917. All three now score the United States below the top, and all three name the same cause, a debt and interest load that keeps rising with no credible plan to stop it.

And the mechanism underneath it has a name most people would recognize in any other setting. In fiscal 2024, for the first time, the interest on the debt cost more than the entire national defense, and by fiscal 2025 that interest was closing on a trillion dollars a year. Washington now borrows to pay it: new loans taken out to cover the interest on the old ones, with no plan that ever pays the balance down. Strip the seal off the Treasury building and that is the mechanic of a Ponzi scheme, the stage where the whole thing runs only as long as fresh lenders keep arriving. The one difference between Washington and a private operator running the identical play is that Washington owns the printing press. But printing dollars to cover a debt is not an escape from default. It is default wearing a different coat, the one the Penn Wharton Budget Model names when it puts the endgame at default "explicitly or implicitly," through the debt monetization that produces significant inflation. The escape hatch and the collapse are the same door.

So the story does not end in a question mark. The government's own auditors have stamped the books unsustainable. The government's own model gives it about twenty years before no tax increase and no spending cut can pull it back. Debt held by the public already runs about the size of the entire economy and breaks its Second World War record inside two years. The arithmetic has already decided the outcome and left open only the year and the form. Washington has shown no capacity to change course, and Texas has no vote to force it. Nor is the form a mystery, because Texans have already sat through the trailer. The debasement in finding four, the roughly 150 billion dollars lifted out of Texans' bank accounts in a single year with no vote and no way to opt out, was not an accident of one bad year. It was the first installment of the only method Washington has left to make an unpayable debt vanish. There will be more of it, and it will run larger.

Here is what that means for Texas, with the comfort stripped off. Texas is chained to that balance sheet. It banks in the dollar, saves in the dollar, and draws its pensions and paychecks in the dollar, and it holds no vote over a cent of the borrowing done in its name. When the reckoning comes, and it is already coming, it does not announce itself. It arrives as the price of everything outrunning the paycheck, the retirement that buys half of what it promised, the benefit quietly means-tested down to close a gap Texans never opened. The inspectors have all but nailed the condemned notice to the door. So the debate about whether Texas can afford to leave has it exactly backward. The danger was never in leaving. The danger is in still being inside the building, chained to the beam, on the day it comes down and takes every dollar denominated in it down together. Independence is the one door out, onto ground Texas already owns and already knows how to stand on. The Texas Bullion Depository and the sound-money law from finding four are the first planks of that ground, laid while there is still time to lay them. Staying is not the safe choice. Staying is standing under a roof its own inspectors have condemned, betting it holds one more year.

What Texas would owe on the way out

Now the question everyone asks. Would Texas have to leave with 3.2 trillion of that debt strapped to its back?

That number is not a bill. It is an opening demand, and Washington's hand is far weaker than it pretends. Walk through it.

No law sets Texas's share. The only international instrument on the subject is the 1983 Vienna Convention on Succession of States in Respect of State Property, Archives and Debts, and it is barely ratified, having never entered into force the way a settled treaty would. We will be straight about which part of it governs Texas. Its Article 38, the clean-slate rule under which no predecessor debt passes at all, is written for a "newly independent State," which is a decolonization term of art, and Texas is not a former colony. Texas is a "separation" case under Article 40, and we make our argument inside Article 40, where it is strong enough that we do not need the other branch. Article 40 asks only for an "equitable proportion," and it says that proportion must be reached "taking into account, in particular, the property, rights and interests which pass" to the new state. Read that clause. The federal assets on Texas soil, the bases, the land, the reserves, are property that passes, and the treaty's own text says they get netted against any debt. The separation branch of the law helps Texas. It does not hand Washington a formula.

And there is a deeper problem with the invoice, one Washington made for itself. That netting the treaty calls for, assets set against debt, depends on someone being able to put a number on the assets. Washington cannot. The Defense Department has failed eight straight audits and never passed one, so it cannot place a verified value on what it owns any more than it can track what it spends, and much of that property, the bases and the land and the equipment, sits on Texas soil. So Washington can name what Texas owes to the penny and cannot put a defensible number on the largest assets that would offset it. It would hand Texas a precise bill for the liabilities and a blank page for the assets, and the burden of proving the net falls on the party sending the invoice. A government that cannot pass an audit is in no position to demand that Texas accept its arithmetic.

The scholarship that tried to build a formula could not agree on one. Even the starting percentage is a fight. Texas is 8.2 percent of federal taxes paid, about 9.2 percent of the population, and about 9.5 percent of GDP, so the "share" swings by hundreds of billions before anyone argues method (the 3.2 trillion in the table above is the tax-weighted figure, and population and GDP run higher). Daniel Blum's survey in the Case Western Reserve Journal of International Law (1997) is the standard treatment, and he lays out four methods, each of which someone has called "just," each of which lands somewhere completely different:

So the honest range Texas negotiates over runs from roughly 3.7 trillion at the high end all the way to zero, and where inside that range a settlement lands is a matter of bargaining power, not arithmetic. Texas bargains from real strength: its energy, its ports, the federal assets sitting on its soil, and Washington's own overriding interest in not detonating the Treasury market during a separation. And the "you will be locked out of credit markets" threat is a bluff. Markets lend to past defaulters constantly, and the United States itself has effectively defaulted more than once, on its demand notes in 1862, on its gold bonds in 1933, on silver certificates in 1968, and on the gold standard in 1971.

The principled case, made plainly. It would be timid, and untrue to the record, to argue only over percentages and never say the harder thing out loud: there is a serious, sourced argument that Texas owes nothing at all. Professor Matt Qvortrup, who studies how new countries are actually formed and wrote the field's practical guide to it, told us, in an interview, that an independent Texas would not be liable for the federal debt, and the scholarship backs the position. The doctrine of "odious debt" runs four centuries deep, from Grotius in 1625 through the jurist Alexander Sack in 1927 to the present, and one of its recognized categories is debt "incurred to suppress secessionist movements." The doctrine is contested and rarely tested in court, its real-world wins negotiated rather than adjudicated, so we do not lean the whole case on it. Several newly independent states, Guinea in 1958 and Algeria in 1962 among them, repudiated colonial-era debts on exactly that principle. Blum's own third method, apportionment by historical benefit, lands at zero for a net contributor. A demand for a "fair share" of a debt the issuer has neither a plan nor the means to ever repay, in a currency built to inflate the obligation away, is not a settlement of anything. It is an exit tax with no warrant in law for the number Washington would name, meant to confiscate, and a free Texas would be right to refuse to pay it.

History is a muddle, and it cuts toward Texas. When the United States seceded from Britain in 1783 it took on none of Britain's debt. When Norway left Sweden in 1905 it apparently took none of Sweden's. Singapore and Bangladesh each assumed some share when they broke away. Russia took the entire Soviet debt in 1992 in exchange for keeping the Soviet foreign assets. South Sudan started debt-free in 2011 because Sudan agreed to keep all of it. Czechoslovakia split its debt two-to-one by population in 1993. There is no single rule here, only a negotiation, and Texas would negotiate from a position of real strength.

One premise underlies all of this, and honesty requires stating it. The exit-debt analysis assumes a negotiated separation. If Washington instead refuses to come to any table, there is no apportionment to argue over, and Texas assumes no debt a departing state cannot be compelled to pay, which is the floor of the range, not the invoice.

So, plainly. That 39 trillion is Washington's debt. A Congress Texans never controlled ran it up, to pay for things Texans never chose. The number Washington would invoice on the way out is not a settled liability. It is the top of a range whose bottom is zero, and Texas would come to the table in good faith, the way honorable nations do, and drive toward the low end by the methods international law actually recognizes. What is not up for negotiation, and needs no negotiation, is the bill Texans are paying right now to stay. Their share of the debt climbs about 150 billion dollars a year, and the hardest part of it, the part that buys nothing at all, is the 72 to 80 billion a year in interest, pure service on a debt that will never be repaid in a dollar that never stops shrinking. Staying is the expensive option.