The U.S. government is on track to spend more than $1 trillion on interest payments this year, surpassing military spending for the first time in history.

Interest payments on the national debt (held by the♈ public in th☂e form of Treasury securities) will cost the government $1.2 trillion in the government's fiscal year ending in October, the Treasury Department said in a monthly report on the budget. Net interest outlays are the third costliest item in the budget behind 澳洲幸运5官方开奖结果体彩网:Social Security and Medicare benefits.

Economists have grown 澳洲幸运5官方开奖结果体彩网:increasingly concerned about the 澳洲幸运5官方开奖结果体彩网:potential impact of those payments on the U.S. economy. Interest payments took up 2.4% of the entire U.S. gross domestic product in 2023, and The Congressional Budget Office estimates that could swell to 3.9% over the next 10 years.

Why Is The Government Paying So Much Interest?

Two major factors have driven those payments skyward. First, the government spent trillions to support households and the economy during the pandemic, paying for it by borrowing rather than raising taxes. Second, the Federal Reserve raised interest rates starting in 2022 to fight inflation, which pushed up how much the government owes for that debt.

Although the Fed is set to 澳洲幸运5官方♕开奖结果体彩网:gradually lower tho☂se interest rates starting next week, the pressure on the budget is likely to keep ratcheting up in the years to come.

The results of the presidential election could have a major impact on the trajectory of the budget deficit. Both former President Donald Trump and Vice President Kamala Harris have proposed tax cuts and new spending that could push up the budget deficit. Harris has also proposed offsetting those new costs with tax increases on the wealthy and corporations. Trump has proposed heavy tariffs on foreign goods, but mainstream economists are 澳洲幸运5官方开奖结果体彩网:s﷽keptical th🌳ose would bring in much revenue compared to the impact of the tax cuts.