The American government’s big pile of IOUs is about to get even bigger.
That was the conclusion of the latest report from the Congressional Budget Office, which forecast this week that the US is on track to add $19 trillion to its national debt by 2034, with payments on that debt totalling some $12 trillion as higher interest rates increase the burden of the nation’s borrowing.
Serious interest
In the latest fiscal year, which ran to the end of September, the federal government raked in more than $4.4 trillion in receipts from individual taxpayers, with nearly half of that sum stemming from individual income taxes ($2.18 trillion). But, as many of us can surely relate to, the government's spending appetite consistently outpaces its income, resulting in a deficit of $1.7 trillion.
The magnitude of the national debt, currently ~$34 trillion in total, means that the government is shelling out nearly $2 billion a day on interest payments (~3% of GDP) just to service the debt. Were the government to somehow magically wipe out its debt — leaving it with no interest to pay — it would have saved a whopping ~$660 billion last year, though that still wouldn't be enough to get the overall federal budget back into the black.
The CBO forecasts have sparked a national conversation about the right level of federal spending, raising questions that beg political answers, rather than definitive economic ones.
