Interest on the U.S. national debt topped $1 trillion for the first time during fiscal 2024, as the annual budget deficit reached its highest level except during the COVID-19 pandemic.
Figures released Friday by the Treasury Department show the federal government spent a $1.13 trillion on gross interest payments to holders of T-bills, notes, bonds and other securities during the 12 months that ended September.30.
The record outlay represents an increase of $254 billion, or 29 percent, over fiscal 2023, which the Treasury Department said was “largely due to higher interest rates” set by the Federal Reserve to tame inflation.
In a prepared statement, Treasury Secretary Janet Yellen said that inflation had “fallen more than two thirds from its peak while the labor market remains strong.”
Yellen also said outgoing President Joe Biden’s proposed fiscal 2025 budget “reduces the deficit by $3 trillion by asking corporations and the wealthiest Americans to pay their fair share, while preserving our important investments in our country’s future.”
The House and Senate have yet to pass budget bills and the federal government is now being financed through December 20 under terms of a continuing resolution approved last month.
The head of the nonpartisan Committee for a Responsible Federal Budget think tank called the nearly $900 billion in net interest payments on the debt “just a truly astounding figure.”
“That’s more than we spent on national defense, Medicare, and children at the federal level,” committee president Maya MacGuineas said in a prepared statement. “The national debt is on track to reach a record share of the economy in just two years, a sobering milestone for both the next Congress and whoever wins the presidency in November.”
Campaign promises made by Vice President Kamala Harris would add an estimated $3.5 trillion to the debt through 2035, while former President Donald Trump would more than double that amount to $7.5 trillion, according to the committee.
The constantly growing national debt is now $35.8 trillion and equivalent to more than 122.3% of the nation’s gross domestic product, according to the U.S. Debt Clock website.
MacGuineas also blasted the government for spending $6.75 trillion during fiscal 2024, up 8 percent and resulting in a $1.83 trillion deficit.
MacGuineas said the size of the budget gap meant that the government “borrowed a whopping $5 billion on average every day.”
“We’re borrowing nearly double the amount we borrowed annually before the pandemic, and this is projected to grow indefinitely. This is no way to run a country,” she said.
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