Annual Interest on US National Debt Approaches One Trillion Dollars!
The Congressional Budget Office (CBO) said yesterday that the U.S. national debt could top $56 trillion by 2034, as spending and interest expenses soar. The increasing costs of Social Security and Medicare continue to climb, along with rising interest rates, which have made it more costly for the federal government to borrow massive sums of money.
The budget deficit in 2024 is projected to be $1.9 trillion, up from a forecast earlier this year of $1.6 trillion. Over the next decade, the annual deficit is projected to surge. As a share of the economy, debt held by the public in 2034 will be 122% of gross domestic product, up from 100% in projected for this year.
Federal revenue is expected to total 17.2% of GDP this year. But CBO significantly revised up projections for federal spending. Outlays are now expected to hit 24.2% of GDP this year and average 24% over the next decade.
The new projections come as Washington gets ready for a tax and spending battle. Most of the 2017 tax cuts will expire in 2025, forcing lawmakers to decide whether to renew them and, if so, how to pay for them. Fully extending the tax cuts could cost around about $5 trillion over 10 years.
More and more baby boomers on Social Security and Medicare continues to weigh on America’s old-age and retirement programs, which are facing long-term shortfalls.
The bigger projected deficits this year are from the Biden administration’s decision to cancel more than $100 billion student loan debt, the cost of new aid packages for Ukraine and Israel and higher than expected outlays for Medicaid.
High interest rates are also making it harder for the U.S. to manage its debt burden. Annual interest costs will likely double by 2034. At that point, the U.S. would be spending about as much more on interest payments as it does on defense. Historically, this is a clear sign of the decline of a superpower.