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The most recent projections from the Congressional Budget Office (CBO) confirm once again that America’s fiscal outlook is on an unsustainable path — increasingly driven by higher interest costs. Growing debt, in addition to the rise in interest rates over the past couple of years, has significantly increased the cost of federal borrowing. In 2023, interest costs on the national debt totaled $659 billion — surpassing most other components of the federal budget.
CBO projects that interest costs in 2024 will total $870 billion — a jump of 32 percent from the previous year and following increases of 35 and 39 percent in each of the two years before that. This year’s high interest bill isn’t a one-year phenomenon, it’s part of a trend that stretches out into the future, as debt continues to climb and relatively high interest rates push up the cost of federal borrowing. Over the next decade, the U.S. government’s interest payments on the national debt are now projected to total $12.4 trillion — the highest dollar amount for interest in any historical 10-year period and more than double the total spent in the past two decades. In fact, by pretty much any measurement, interest on the national debt will soon grow beyond its highest level since 1940, when such data were first collected:
Another way to contextualize the growth in interest costs: right now, the Treasury pays about $2.4 billion per day, on average, for interest. And unless we change course, that will rise to $4.5 billion per day in 2034.
Mounting interest costs put tremendous pressure on the federal budget, making it more difficult and costly to address pressing challenges and invest for the future. In fact, under CBO’s projections, net interest costs will eventually become the largest “program” in the federal budget — exceeding Medicare in 2046 and Social Security in 2051. Rising interest costs also contribute to a vicious cycle of higher debt and additional interest costs.
Any number in the trillions can be hard to grasp. Here are some ways to consider what $12.4 trillion in interest means for America.
$12.4 trillion is:
By any measure, interest costs as part of the federal budget are at an all-time high, and trending even higher in the years ahead. Securing our nation’s fiscal and economic future will mean getting these interest costs under control, which will help relieve pressure within the budget, allow us to invest in more forward-looking priorities for our future, respond to emergencies, and help ensure a vibrant and inclusive economy for our nation.
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