Interest payments on the national debt have now surpassed, individually, military, Medicare and Medicaid spending, according to the nonpartisan Committee for a Responsible Federal Budget. That’s based on the initial seven months of data for the current fiscal year.
With the national debt now topping $34 trillion and high interest rates, greater and greater proportions of federal spending is now going toward interest on borrowed money.
Politicians will no doubt hope Americans attribute this to the high level of pandemic-era spending. But the reality is that even before the coronavirus pandemic in 2020, and even with a robust economy, the federal government was spending $1 trillion more than it was taking in and was on track to spend as much as $1.5 trillion through the 2020s.
After the initial wave of emergency spending in response to the pandemic, however, Congress continued to indulge in spending binges. This includes trillions of dollars spent under President Joe Biden in the name of reviving the American economy post-pandemic and hundreds of billions on wars abroad. Once upon a time, matters like federal spending and the national debt were of top concern to the Republican Party. Just over a decade ago, there was even something called Tea Party movement, raising the alarm across the country about federal profligacy. Today, you’re lucky to even hear a Republican member of Congress mention debt, deficits or the words “fiscal responsibility.”
There are, of course, consequences to this level of debt.
“The higher the debt is, the higher interest rates will be,” David Wilcox, senior fellow at the Peterson Institute for International Economics, explained to The Hill. “Higher interest rates tend to discourage investment in new capital by businesses, and capital makes workers more productive.”
The inability of the federal government to keep spending in check extends to an inability to maintain the solvency of Social Security, Medicare and Medicaid, notes the Committee for a Responsible Federal Budget.
“Within the decade, the Social Security retirement and highway trust funds will be insolvent, requiring painful across-the-board cuts,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, in a statement earlier this year. “And by 2034, debt will reach an unprecedented 116 percent of output.”
But instead of meeting these challenges, both parties have fiddled, preferring to do everything but govern. Worse, there’s little reason to trust either party at this point with getting things done. Republicans don’t talk about fiscal matters anymore, while Democrats will use any new tax revenue to justify spending even more.
At this rate, it will take another crisis to get Congress to act. But we’re sure they’ll botch things even then.
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