by Ryan McMaken, Mises Institute
Interest on the national debt is quickly becoming one of the largest expenses in the national budget. Based on projections from the OMB, it now appears that growth in interest payments on the national debt will be significantly outpacing any other spending category in coming years.
The OMB’s projections show debt-payment outlays growing a startling 70 percent from 2017 to 2020. The sector with the next-highest growth rate is Defense, but that grows by only 20 percent over the same period:
While Medicare, defense, and Social Security all, for now, still use up much larger portions of federal spending, it won’t be long before payments on the debt will eat up hundreds of billions of dollars every year on a par with programs like Medicare and National Defense.
Over just a few years, that will be trillions of dollars that current taxpayers will have to pay to cover the profligate spending of the past that was done with assurances from politicians, economists, and complacent voters that deficits don’t matter.
The New York Times reported on the growing role of interest payments last month when it examined estimates from the Congressional Budget Office showing that interest payments will take up 13 percent of the budget in a decade. For a sense of how large a chunk of the budget that will be, we can note that both Medicare and defense spending (not including veterans’ benefits) each required 15 percent of all federal outlays.In that year, interest payments required less than seven percent of the budget, but that is increasing fast.