(The Center Square)
The cost of paying interest on the national debt will continue to grow as a financial burden for the US over the next decade, surpassing what the nation spends on national defense within a few years, a newly released budget analysis shows.
The national debt hit $31 trillion last fall and is on its way to $32 trillion this year. As that debt grows, the US Congressional Budget Office projects that the federal government will spend more than $10 trillion on interest payments alone over the next decade.
“To put this $10.5 trillion figure in perspective, this means that net interest spending will exceed all defense spending over the next decade,” the Committee for a Responsible Federal Budget said in an analysis of CBO’s data. “Furthermore, we estimate that net interest spending will exceed all federal spending on children this year, meaning we will pay more to service our debts to the past than invest in future generations.
“For every dollar the US government borrows over the next decade, 50 cents will go to paying the interest on our national debt,” the group added.
CBO projects that debt as a percentage of GDP will hit record levels during that time and average deficits of $2 trillion.
Related: CBO: Federal Debt Growing Faster Than Expected, Deficits Average $2 Trillion
Recent debt projections are based on current spending obligations. That means new spending by Congress will accelerate debt growth beyond those projections without compensating for tax increases or spending cuts.
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“After jumping from $352 billion in fiscal year (FY) 2021 to $475 billion in 2022, annual net interest costs will triple, reaching $1.4 trillion by 2033,” the CRFB said. “As a share of the economy, net interest will exceed its share of GDP from 1.9 percent of gross domestic product (GDP) in FY 2022 – 3.2 percent in 1991 – to a peak of 3.6 percent by 2030.
The CRFB said the cost of interest on the national debt would soon exceed the cost of entitlements if nothing changed.
“Unfortunately, the decades following 2033 are expected to be in even worse fiscal shape. With deficits continuing to grow unsustainably over time, interest on the debt will eventually become a larger portion of the federal budget,” the group said. “Net interest will surpass defense spending by 2028, Medicare spending by 2044 and Social Security spending by 2050, becoming the largest single line item in the budget. By 2053, net interest will consume approximately 7.2 percent of GDP — nearly 40 percent of federal revenues. .”
Syndicated with permission from The Center Square.
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