America’s debt interest payments have exceeded defense spending
America is known for its vast military budget, but even that can’t beat Washington’s addiction to debt.
According to an analysis by Creditnews Research, the annualized interest payment on Washington’s federal debt has reached a record $1.1 trillion—which is 34% more than U.S. annual defense spending.
To get a sense of just how massive these numbers are, consider that the U.S. spends more on its military than the next ten biggest defense spenders combined.
For another benchmark, Washington’s interest payments are equivalent to 25% of its total revenues ($4.4 trillion) for the year—the largest share on record.
That doesn’t seem to faze lawmakers. Even by the Treasury Department’s own estimates, the U.S. is expected to spend $1.7 trillion above the government’s revenues for the year.
Experts warn that America’s debt burden will get worse before it gets better.
Why interest payments are going up
Interest payments are rising (and are expected to rise further) because the majority of the national debt was issued when rates were much lower.
If you borrow when interest rates are less than 3%, and the debt rolls over into Treasuries that pay between 4.5% and 5.5%, your payments will snowball, according to Marc Goldwein, a senior policy director for the Committee for a Responsible Federal Budget.
“It’s only going to get worse from here, at least for a while,” he told CNN.
The impact of higher interest rates on payments was perhaps most pronounced in October, which is the first month in Washington’s fiscal year.
That month, the government paid $76 billion in interest—up 77% from October 2022.
According to the Congressional Budget Office, interest payments alone will reach $1.4 trillion in fiscal 2033 before nearly quadrupling to $5.4 trillion by 2053.
Is Uncle Sam spending above his means?
Depending on who you ask, Americans are generally dissatisfied with the government’s handling of finances.
A March 2023 poll by AP and NORC at the University of Chicago found that 60% of respondents said the government is spending too much.
Even then, and perhaps ironically, between 51% and 65% of respondents said the government was spending too little on things like drug rehabilitation, border security, Medicare, social security, healthcare, and education.
This suggests Americans are skeptical about the way the government handles finances but still think it plays an important role in funding certain programs.
But it’s hard to argue that the government is spending more than it needs to.
According to the Sustainable Budget Project, U.S. federal spending increased by 69.4% between 2013 and 2022. Adjusted for inflation, that’s 3x the population growth.
Even with massive deficits and surging interest payments, the government is showing no signs of fiscal restraint.
As Creditnews reported, Bidenomics plans to inject more than $2 trillion into the U.S. economy through various environmental, infrastructure, and manufacturing initiatives.
The majority of that spending will be funded by federal debt.