Uncle Sam Paying over $1 Trillion in Gross Interest

The U.S. government has paid its creditors more than $1 trillion in interest during its 2024 fiscal year. CNBC reports on Uncle Sam’s new grim fiscal policy milestone:

With the Federal Reserve holding benchmark rates at their highest in 23 years, the government has laid out $1.049 trillion on debt service, up 30% from the same period a year ago and part of a projected $1.158 trillion in payments for the full year.

Subtracting the interest the government earns on its investments, net interest payments have totaled $843 billion, higher than any other category except Social Security and Medicare.

The jump in debt service costs came as the U.S. budget deficit surged in August, edging closer to $2 trillion for the full year.

The net interest figure of $843 billion represents over 13% of the U.S. government’s total spending through the first 11 months of its 2024 fiscal year, which ends on September 30, 2024. This is money the U.S. government must pay its creditors, or it will default on the national debt, making its fiscal situation even worse. It’s a big number because the federal government borrowed over $35.2 trillion to support its excessive spending.

The federal government could afford to get away with such extensive borrowing while interest rates were low. However, after inflation was unleashed in 2021, the Federal Reserve hiked interest rates in 2022 and 2023 to fight it. That inflated the cost of paying interest on the national debt, which has become the fastest-growing category of government spending.

If not for U.S. politicians’ lousy spending choices, the interest owed on the national debt might not have become so costly. Restraining the growth of government spending to more sustainable levels would have avoided nearly all the dire consequences that arose because of it.

Alas, that is a lesson that too many of today’s politicians refuse to learn.