The US Government does a great job of not paying much interest on their total outstanding debt of $14 Trillion.
This is how the Government manages its interest cost to a (relatively) negligible level.
For the 12 Months to February 2011:
Interest on Debt Securities: ($424 Billion)
Rebate of Earnings: $100 Billion The Federal Reserve pays a dividend on its earnings on assets purchased.
Rebate on Public Debt: $185 Billion Even though the Government issues bonds to Public Government Departments, the interest is actually rebated on the outstanding public debt of $4,600 Billion.
Net Interest Cost: ($139 Billion) On $14,200 Billion of outstanding debt - a little bit less than 1%.
With Quantitative Easing, the Federal Reserve is investing in 10 year bond yielding 3.5%, and paying for it by borrowing short term funds from the banks at an interest rate of around 0.15%. The positive funding return is rebated back to Government. (source: www.fms.treas.gov )
The decreasing net interest costs is quite impressive given the increasing Trillions of outstanding debt.