One of the fastest growing portions of the federal government’s spending explosion under President Joe Biden is interest on the federal debt. There are two closely related reasons. First, interest rates have climbed over the past few years and, second, Biden’s heavy foot on the government-spending pedal. The man just doesn’t know when to quit spending.
That combination of explosive spending and explosive interest rates has pushed projected federal spending on interest in fiscal year 2024 to $870 billion, according to the Congressional Budget Office (CBO). That’s a 32 percent increase from 2023’s net interest cost of $659 billion.
As you can see from the St. Louis Federal Reserve Bank’s graph, spending on interest shot up beginning in 2021.
Just how big is $870 billion?
If we compare U.S. interest payments to other countries’ gross domestic product (GDP), our interest payments would be the 20th largest economy in the world, surpassing Switzerland, whose total GDP is $807 billion.
If we were to compare it to state GDPs, it would be the seventh largest state economy, pushing Ohio, with a GDP of $823 billion, into eighth place.
Just to reiterate, the federal government is projected to spend more on interest in FY2024 than the entire economies of Switzerland or Ohio.
And it gets worse, but you probably knew that.
The CBO projects interest on the federal debt to increase to $951 billion in FY2025—nearly four times what it was only 10 years ago, in 2015.
And it gets even worse. CBO estimates that by 2034, net interest will cost the government $1.6 trillion, nearly twice what it’s projected to be this year.
Of course, those projections are based on current law, and that could change—and probably will if Biden gets his way. For example, if Biden is allowed to forgive the $146 billion in student loan debt he recently proposed, that will affect the federal debt and therefore the interest paid on the debt. While Republicans haven’t been very successful, at least they’ve tried to slow the spending spree.
Astonishingly, the federal spending explosion on interest may be just getting started.
April 16, 2024