In the first seven months of fiscal year 2024, which began in October, spending on net interest surged to $514 billion, surpassing spending on both national defense ($498 billion) and Medicare ($465 billion). In fact, interest costs have topped spending on veterans, education and transportation combined.
“Rising debt will continue to put upward pressure on interest rates,” the Committee for a Responsible Federal Budget (CRFB), a nonpartisan group that advocates for lowering the national deficit, said in a statement. “Without reforms to reduce the debt and interest, interest costs will keep rising, crowd out spending on other priorities and burden future generations.”
Spending on interest is now the second-largest line item in the budget and is expected to remain so for the duration of 2024. By 2051, it is projected to become the most expensive part of the budget.
“Rising interest costs will crowd out other possible uses of government resources, and then also pose a risk to our economic stability,” said CBO Director Phillip Swagel while testifying on Capitol Hill in February.
Interest rates are not the only factor making servicing the debt more expensive. Over the past decade, the size of the national debt has more than quadrupled. From just four decades ago, the debt skyrocketed from $907 billion to more than $34.5 trillion as of Wednesday afternoon, according to the latest Treasury Department figures.