Programs that millions of Americans rely on and care about may be feeling strained by the high and growing interest costs of the national debt.
The Congressional Budget Office (CBO) projects that total interest payments in fiscal year 2024 will be $892 billion and will rapidly increase over the next decade, rising from $1 trillion in 2025 to $1.7 trillion in 2034. I am. Net interest payments total $12.9 trillion. Next 10 years. Relative to the size of the economy, interest rates are expected to rise from 3.4% of gross domestic product (GDP) in 2025 to 4.1% in 2034. The previous highest interest rate relative to GDP was 3.2% after World War II. This ratio will be exceeded in 1991 and will be exceeded in 2025.
The federal government already spends more on interest than on budget areas such as:
Moreover, spending on interest will exceed federal spending on major budget categories in the coming years.
In fiscal year 2024, the federal government will spend more on interest than on nondefense discretionary spending, including transportation, veterans, education, health, international affairs, natural resources and the environment, general science and technology, Includes funding for the public. government etc. From fiscal years 2024 to 2027, interest payments will exceed the amount the federal government spends on Medicare, less offsetting revenues. However, the relationship is generally reversed during the remaining decades.
Moreover, interest will continue to outpace other budget categories. Projects of interest to the CBO will be the largest category in the federal budget in 2051, surpassing Social Security spending for that year, according to the latest long-term projections.
Looking ahead, lawmakers need to chart a more stable and sustainable path for the federal budget to alleviate the growing interest burden and free up space for national priorities.
Related article: Interest costs on government bonds expected to reach historic highs over next 10 years
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