The US government just ran its biggest-ever July shortfall, a bad sign for taxpayers as the cost of carrying the national debt keeps climbing.

• The government spent far more than it took in last month, pushing the July gap to a record.
• The 10-month shortfall for the year is now near $1.8 trillion.
• Interest on the debt alone hit $118 billion in July, up sharply from a year ago, as higher rates make old and new borrowing more expensive.
• With the national debt closing in on $40 trillion, lawmakers are split over whether the fix is spending cuts or fraud crackdowns.
• Rising interest costs crowd out everything else and point toward more taxes down the road.

Outlook: As long as rates stay high and spending keeps outpacing revenue, the deficit and the interest bill on it will keep growing.