Interest costs on the national debt just surpassed spending on defense, Medicare
UBS Wealth Management SVP Brenda O’Connor Juanas and the Lonski Group founder John Lonski discuss the earnings season and share their market outlook for 2024 on 'Mornings with Maria.'
Interest payments on the nation’s ballooning debt just eclipsed spending on defense and Medicare, worrying policy experts who have warned this threatens to undermine U.S. economic stability.
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.»
NATIONAL DEBT TRACKER: AMERICAN TAXPAYERS (YOU) ARE NOW ON THE HOOK FOR $34,534,845,450,747.16
For years, the U.S. was able to borrow cheaply, thanks to historically low interest rates. However, as the federal funds rate increased, so did short-term rates on Treasury securities, making federal borrowing far more expensive.
The Federal Reserve raised interest rates 11 times in 2022 and 2023, lifting rates to the highest level in 23 years in an attempt to crush high inflation and cool the economy. Policymakers have signaled they will hold rates at those elevated levels until they are certain inflation is conquered.
Federal Reserve Chairman Jerome Powell speaks at the Thomas Laubach Research
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