The US is paying a record amount of interest on its national debt

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The rapid increase in interest rates over the past year could cause some collateral damage to the U.S. government's finances, because as interest rates rise, so will the federal government's borrowing costs on its $32.68 trillion in debt.

Interest payments on the national debt are projected to be the fastest-growing part of the federal budget over the next three decades, according to the latest estimates from the Congressional Budget Office (CBO).

Thanks to a combination of high inflation, rising interest rates and unrelenting growth in the national debt, interest payments are expected to triple from nearly $475 billion in fiscal year 2022 to a stunning $1.4 trillion in 2032. 

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By 2053, the interest payments are projected to surge to $5.4 trillion — more than the U.S. government spends on Social Security, Medicaid, Medicare and defense. 

As a share of the economy, total interest on the national debt will hit a record 3.2% of GDP, which is the broadest measure of goods and services produced in the country, by 2030. That percentage will more than double to 6.7% by 2053.

«By 2051, spending on interest will be the single largest line item in the federal budget, surpassing Social Security, Medicare, Medicaid, and all other mandatory and discretionary spending programs,» said the Committee for a Responsible Federal Budget (CRFB), which advocates for reducing the federal deficit. 

For years, the U.S. has been able to borrow cheaply as interest rates have remained historically low. However, as the federal funds rate