Shocking Surge: National Debt Interest Payments Skyrocket Beyond $1 Trillion Amid Growing Deficit

A view captured on January 20, 2023, shows a bronze seal beside a door at the U.S. Treasury building in Washington, U.S. (Credit: Kevin Lamarque | Reuters)

For the first time, the U.S. government has exceeded $1 trillion in interest payments on its $35.3 trillion national debt this year, as reported by the Treasury Department on Thursday. This spike is attributed to the Federal Reserve maintaining benchmark rates at their highest level in 23 years. The government has thus far spent $1.049 trillion on debt service—an increase of 30% compared to the same period last year—and is projected to spend $1.158 trillion for the entire year. After accounting for interest earned on government investments, net interest payments stand at $843 billion, trailing only Social Security and Medicare in terms of expenditure.

The rise in debt servicing costs coincides with a surging U.S. budget deficit, which nearly hit $2 trillion for the full year as of August. With just one month left in the federal fiscal year, the August deficit ballooned to $380 billion, a stark contrast to the $89 billion surplus recorded in the same month last year—a figure influenced significantly by student debt forgiveness accounting adjustments. This brings the 2024 deficit close to $1.9 trillion, marking a 24% increase from the previous year.

While the Federal Reserve is expected to lower rates by a quarter of a percentage point next week, Treasury yields have already plummeted in recent weeks in anticipation of future rate cuts. The benchmark 10-year note recently yielded about 3.7%, down over three-quarters of a percentage point since early July.

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Original Story https://www.cnbc.com/2024/09/12/interest-payments-on-the-national-debt-top-1-trillion-as-deficit-swells.html
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