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Programs that millions of Americans depend on and care about may be feeling a squeeze from interest costs on our high and rising national debt.
The Congressional Budget Office (CBO) projects that interest payments will grow rapidly, tripling in just ten years from $399 billion in fiscal year 2022 to $1.2 trillion in 2032. In total, net interest payments will total nearly $8.1 trillion over the next decade. Relative to the size of the economy, interest will double from 1.6 percent of GDP in fiscal year 2022 to 3.3 percent in 2032, which would be the largest ratio since at least 1940 (the first year for which the Office of Management and Budget reports such data).
In fiscal year 2022, the (CBO) anticipates that the federal government will spend more on interest than on budget areas such as veterans’ benefits, transportation, and education.
Then, over the next few years, spending on interest will surpass spending on major budget categories:
To make a couple of other comparisons, in fiscal year 2026, the federal government will spend more on interest payments than the total portion of the federal budget allocated to children (based on data compiled by the Urban Institute). And in fiscal year 2027, interest payments will exceed the amount the federal government has historically spent on education, infrastructure, and research and development — combined.
Over a longer period, interest will continue to outstrip other budget categories. CBO projects that interest will exceed the amount spent on Medicare in 2046 and Social Security in 2049, at which point it will be the largest expense in the federal budget.
Looking ahead, lawmakers should chart a more stable, sustainable path for the federal budget that would alleviate the growing interest burden and help ensure that there is room in the budget for national priorities.
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