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October 23, 2018

Last Year's Half-Trillion Interest on the Federal Debt

 

$523,017,301,446.12!
 
Let that number sink in just a minute.
 
According to the Treasury Department, that’s the interest owed on gross federal debt for fiscal year 2018, which ended in September. Only one year’s worth. 
 
$523,017,301,446.12
 
That’s about 15 percent of the total 2017 revenue, just for interest. And because interest rates are rising, and because Congress refuses to end its spending binge, that number will likely increase for the foreseeable future [see table below].

 
Now, that number may be larger than you are used to seeing. As the St. Louis Federal Reserve Bank shows, interest on the federal debt for 2018 was $324.7 billion.
 
But that figure represents federal debt held by the public, which was about $14.8 trillion at the end of 2017, according to the Fed. It excludes the money the federal government borrows from the Social Security and Medicare Trust Funds and other intergovernmental loans. When that debt is included, the total federal debt is nearly $22 trillion.
 
The federal government pays interest on all of the debt, not just that owed to the public. That’s why total federal interest for 2018 was $523 billion.
 
So how much is $523 billion? It is equal to the total combined individual income and employment tax (excluding business income tax) for the 30 smallest states, ranked by income tax revenue.
 
Most reports citing interest on the federal debt exclude the trust funds and intergovernmental loans because that’s “money we owe to ourselves,” as if that is somehow not as real as the debt we owe others.
 
But if it’s money we owe, even to ourselves, it needs to be included and highlighted if we want an accurate picture of how debt-ridden we really are—all $523,017,301,446.12 of it.


 

  • TaxBytes-New

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