An analysis by the Congressional Committee for a Responsible Federal Budget (CRFB) warned that the interest on the historic figure of national debt ($34 trillion) is expected to exceed the total defense budget ($822 billion) and Medicare payments in the fiscal year 2024:
Interest on the debt is the fastest growing part of the budget. ... In Fiscal Year (FY) 2024, spending on interest is projected to total $870 billion, while spending on national defense will total $822 billion. This has never been the case before, going back to at least 1940. ... In addition to breaching defense spending, interest costs are expected to exceed Medicare spending this year.
Interest will become the second largest expense in the federal budget "behind only Social Security." Phillip Swagel, director of the Congressional Budget Office (CBO), commented that the increase is due to the increase in debt and the growing and constant rise in interest rates: "We have more debt and we have higher interest rates ... It makes us more vulnerable as well with more debt if interest rates go yet higher, then it's like a turbocharger with our interest payments going up."
CRFB CBO February 2024 Budget and Economic Outlook by Veronica Silveri on Scribd
Debt to reach new records
The CBO predicts that debt will increase by $21 trillion over the next 10 years: "As a share of the economy, debt will grow from 97 percent of Gross Domestic Product (GDP) in FY 2023 – twice the 50-year historical average of 48 percent – to a record 106 percent of GDP by 2028. It will continue to grow to 116 percent by the end of 2034":
Such high levels of debt carry significant risks and threats to the economy and the nation as a whole. High debt levels put upward pressure on interest rates, discourage investment, slow economic growth, threaten economic vitality, place a strain on the budget through rising interest payments, create geopolitical challenges and risks, make responding to new emergencies more challenging, and impose intergenerational unfairness between current and future generations.
The report also shows that government spending and revenue "will remain far apart." Spending will increase from 22.7% of GDP in 2023 to 24.1% of GDP in 2034. On the other hand, revenue will increase from 16.5% of GDP in 2023 to 17.1% in 2025 and then rise to 17.9% in 2034.
