In a troubling sign for the U.S. economy, the federal government has paid over $1 trillion in gross interest on its debt for fiscal year 2024.
According to the Treasury Department, approximately $1.05 trillion in interest on Treasury debt securities has been paid so far, with the figure expected to reach $1.16 trillion by the end of the fiscal year on September 30.
This development represents a 30% increase compared to the previous year and highlights the mounting costs of servicing the nation’s ballooning debt, which currently stands at over $35 trillion.
Despite this alarming rise in gross interest payments, the federal government’s net interest outlays for fiscal 2024 totaled $843 billion, exceeding even the country’s national defense spending, which has reached $798 billion so far this year.
However, Social Security and Medicare still remain the largest spending categories for the U.S. government.
Gross interest payments include intragovernmental transfers, which is why fiscal hawks often focus on net interest payments when assessing the true cost to taxpayers.
Nonetheless, this $1 trillion milestone has drawn attention, underscoring the growing strain on the federal budget.
CNBC noted that this is the first time in U.S. history that gross interest payments have crossed the trillion-dollar mark.
The surge in interest payments is happening alongside a projected deficit of nearly $2 trillion for the current year.
August alone saw a $380 billion shortfall, a sharp contrast to the $89 billion surplus recorded in July.
The drastic swing in the budget was partly due to accounting adjustments related to the Biden-Harris administration’s student debt forgiveness program, a policy championed by both President Joe Biden and Vice President Kamala Harris.
The escalating interest payments have sparked renewed debates in Washington over government spending and national debt.
House Republicans are gearing up for a major budget battle with Democrats, citing the swelling debt as a key reason to push for deeper spending cuts.
GOP leadership attempted to pass a stopgap funding bill last week to avert a government shutdown, but the vote was shelved after facing resistance from conservative hard-liners demanding more aggressive spending reductions.
As concerns over inflation, government spending, and economic instability continue to rise, the Biden administration faces mounting pressure from Republican leaders and voters.
During a recent presidential debate, GOP frontrunner Donald Trump repeatedly criticized Vice President Kamala Harris on economic issues, including rising interest payments and the national debt.
According to a post-debate poll by YouGov, Trump holds a substantial lead over Harris when it comes to handling the economy, with 40% of voters believing Trump would perform better on the issue compared to just 25% for Harris.
This news of skyrocketing interest payments is likely to reinforce the narrative that the current administration is struggling to manage the nation’s fiscal health.