The United States government is set to spend a staggering $870 billion this year on interest payments for its national debt. This is the first time since 1940 that interest spending will exceed the budget for national defense, which stands at $822 billion.
Interest as the Second-Largest Expense
The Committee for a Responsible Federal Budget (CRFB) reports that interest payments are projected to become the second-largest government expense this year, behind only Social Security and ahead of Medicare.
Growing Burden on the Economy
The CRFB highlights that the cost of interest payments is growing rapidly relative to the size of the US economy. In 2020, interest spending accounted for 1.6% of GDP, but it is projected to rise to 3.1% of GDP this year. This is expected to exceed the previous record of 3.2% set in 1991.
National Debt at Record High
As of now, the national debt stands at $34.332 trillion. The CRFB warns that the rising interest payments will put further strain on the federal budget and limit the government’s ability to invest in other areas.
