Record $1.2 trillion in interest payments are blowing up US budget

Published On Sep 13, 2024, 4:31 PM

The U.S. government is projected to spend a record $1.2 trillion on interest payments in 2024, marking the highest amount in history. This surge in interest payments is attributed to extensive deficit spending during the pandemic and subsequent federal interest rate hikes by the Federal Reserve, aimed at controlling inflation. Interest payments now exceed military spending for the first time and are the third-largest expense in the federal budget, following Social Security and Medicare. Economists are increasingly concerned about the long-term implications of these rising interest costs on the U.S. economy, which could see interest payments on the national debt rising to 3.9% of GDP over the next decade. The upcoming presidential election may further impact the budget, with both parties offering tax cuts that could exacerbate the deficit. Vice President Kamala Harris has suggested increased taxes on the wealthy to offset new spending proposals.