One aspect of the debt ceiling theater underway in Washington that deserves far more attention than it's received: the rapidly rising interest payments on Uncle Sam's $31 trillion pile of debt.
In the days of low-to-zero interest rates, debt payments were big, but not outlandishly so. That's changed substantially since the Federal Reserve has started raising interest rates in order to combat inflation. According to The Wall Street Journal, debt service:
…has been among the government's largest spending increases so far this year, contributing to a deficit that has widened to $460 billion, up 78% from $259 billion in the same four months of last fiscal year.
To put that in perspective, the Committee for a Responsible Federal Budget notes that interest payments are larger than…
…spending on veterans' programs, food and nutrition services, transportation, and higher education spending, among others. In 2022, only Social Security, Medicare, Medicaid, and spending on all defense programs were larger than interest payments.
And those costs will only rise as the debt gets bigger. But that doesn't seem to bother some in the political class:
Treasury Secretary Janet Yellen told reporters in Tennessee this week: “It is true that interest rates have gone up, and slowly that raises the cost to the country and to the federal budget of interest on the debt, so in that sense it's a drag. But our budget projections have long assumed that interest rates would move back toward more normal levels.”
“Assumed” is doing a lot of very heavy lifting in Yellen's remarks. Assuming rates will “normalize” at some future point is not an economic forecast so much as it's a guess. And a wild guess at that.
The more prudent approach is to understand that high-interest payments are a problem now and will continue to be a problem in the future without even minimal fiscal restraint.
Pretending – or assuming – otherwise is recklessness on steroids. But that seems to be the base case for official Washington, where the major political parties spend today in the hope that someone else will get stuck with the bill.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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Old Tricky Dicky NEVER should have taken the USA off of the Gold Standard. That move gave the ridiculous cheaters and looters every excuse to pilfer the public Treasury and the populace forever and ever, amen. Like somebody said: the Government never actually makes money. They merely confiscate YOUR money and MINE at the point of a GUN. Those of you out there who are asleep on social media and Monday Night Footbawl, awaken and take notice. It’s all just panem et circenses: bread and circuses to placate an unsuspecting populace.
The right has said we need cuts and Biden has said there is NO Negotiating as recently as today. The Rescue plan is nothing but a money grab anyway
We need not to raise the debt ceiling, but to cut the spending, & 1 place to start is the criminal invaders we cannot afford! Shut down the border & send the criminals ALL back whence they came. That would cut an enormous cost, then readjust Medicaid enrollment, , & get the non-disabled OFF SSDI; addictions are not disabilities, they are just bad choices! Give welfare/Medicaid / WIC/ SNAP mothers 1 kid assistance & no more! Make them get into job training & get off assistance, & learn morals; more kids come out of their pockets, not taxpayers’. Make infanticide & feticide the crimes they are & charge all conspirators involved according to extant conspiracy to commit murder laws. That’ll save necessary $$$to PP et al. Then shut down the unconstitutional agencies, another massive savings. When you accomplish this e can talk about more “fat” trimming…
Censors: disregard! I am dumping you
So what IS the annual interest payment now? And how much is that per person?? (our population is now. c. 330,000,000.)