Interest on the National Debt is a Ticking Time Bomb | Citizens Against Government Waste

Interest on the National Debt is a Ticking Time Bomb

The WasteWatcher

Washington has a spending problem, and that problem has led to an unprecedented amount of debt.  Congress’ spending spree in recent years has led to record-high inflation, higher interest rates and now even bigger and more expensive government debt.  As interest rates and government debt continue to grow, the taxpayer’s burden of paying the interest on the debt will be greater that every individual federal program by 2051.  In 2025, interest will surpass all spending on defense.  The cost of paying government debt is a ticking time bomb and if Congress does not cut spending, every Americans’ finances will be swallowed up by the interest costs.

The increase in debt did not happen overnight, but it was exacerbated when Congress enacted a series of massive trillion-dollar-plus spending bills to provide “relief” during and after the COVID-19 pandemic.  While this spending did provide some critical relief, it also brought on inflation and forced the government into even more debt.  According to the Congressional Budget Office (CBO), government debt held by the public is expected to nearly double over the next decade, rising from $24.3 trillion at the end of 2022 to a whopping $46.4 trillion at the end of 2033.  The total debt at the end of 2033 would be 118 percent of the country’s Gross Domestic Product (GDP), which is 21 percent higher than it was at the end of 2022.

The price tag on the government’s whopping debt is also growing as interest rates continue to rise.  The CBO report noted that the rising debt and interest rates would “slow economic growth, drive up interest payments to foreign holders of U.S. debt, elevate the risk of a fiscal crisis, increase the likelihood of other adverse effects that could occur more gradually, and make the nation’s fiscal position more vulnerable to an increase in interest rates.”  

Despite the critical threat that government spending and debt pose to the country’s future, elected officials continue their spendthrift behavior.  President Biden proposed widespread student loan forgiveness, which the Penn-Wharton Budget Model estimated would cost between $300 billion and $980 billion over 10 years.  The White House and Democrats in Congress also supported the dubiously-named Inflation Reduction Act (IRA), which increased spending and harmed consumers while doing nothing to tame inflation.  President Biden himself said the IRA “has less to do with reducing inflation than it does to do with providing for alternatives that generate economic growth.”

Thankfully for taxpayers, some members of Congress are taking steps to address the looming debt crisis.  On April 25, 2023 the House of Representatives passed the Limit, Save, Grow Act of 2023.  This bill permits a responsible increase of the debt ceiling in exchange for returning government spending back to fiscal year 2022 levels, clawing back unspent COVID-19 relief dollars, and rescinding wasteful provisions of the IRA. 

Taking fiscal responsibility even further, the House Budget Committee and its chairman Jodey Arrington (R-Texas) unveiled a plan on September 27, 2023, called “Reverse the Curse: The Plan to Restore Fiscal Responsibility, Economic Freedom, and Prosperity in America” that would balance the budget and slash deficits by $16.3 trillion over the next 10 years.  This plan would limit discretionary spending from growing by more than 1 percent each year, reduce regulatory barriers to stimulate strong economic growth, and extend provisions of the 2017 Tax Cuts and Jobs Act.  The Budget Committee also recommends reducing mandatory spending programs by $8.7 trillion over the next decade, which would help reduce the debt and keep those programs solvent.

 Congress continues to spend money like a trust fund baby with their parents’ credit card and that debt is hanging like a Sword of Damocles over every American.  Congress should commit to passing policies that will reduce government spending, pay down the federal debt, and promote economic growth.   

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