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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 total $663 billion in fiscal year 2023 and rise rapidly throughout the next decade — climbing from $745 billion in 2024 to $1.4 trillion in 2033. In total, net interest payments will total nearly $10.6 trillion over the next decade. Relative to the size of the economy, interest will rise from 2.7 percent of GDP in fiscal year 2024 to 3.7 percent in 2033. The previous high for interest relative to GDP in the post-World War II era was 3.2 percent in 1991 — that ratio would now be exceeded in 2029.
The federal government already spends 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 another comparison, in fiscal year 2024, the federal government will spend more on interest payments than the total portion of the federal budget allocated to children (based on 2022 data compiled by the Urban Institute). Over a longer period, interest will continue to outstrip other budget categories. CBO projects that interest will exceed the amount spent on Medicare in 2044 and Social Security in 2050, 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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