How Washington’s interest bill on the $40 trillion national debt exploded 14% in just 9 months
The huge increase in interest expense has two sources.
In just nine months, Washington's interest bill on the $40 trillion national debt surged by 14%, from $846 to $963 billion, marking the biggest jump among expense categories, according to the CBO's Monthly Budget Review. Social Security, Medicare, and Medicaid all saw smaller increases of 5%, 8%, and 8% respectively. Over the past year, interest payments skyrocketed to equal 70.1% of Social Security outlays, up from 64.9% a year ago.
The increase in interest expense can be attributed to two factors: a 7.3% surge in the federal debt, which reached $40 trillion, and a steep rise in interest rates, with yields on 2-year Treasury Notes climbing from 3.94% to 4.18% and 10-year notes from 4.37% to 4.69%. The Treasury plans to buy large amounts of 10-year Treasuries to curb interest costs, but this stop-gap measure won't address the fundamental issue of the government's ever-growing borrowing.
The interest explosion has received limited coverage, but it remains the most significant force behind the rising interest costs.
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