The federal government is expected to have to spend more servicing the country’s massive national debt this year than it will spend on defense or Medicare as interest payments skyrocket, according to a report by the Congressional Budget Office (CBO).
The U.S. federal government is projected to spend $870 billion toward servicing its debt in fiscal year 2024, up from $659 billion in FY 2023, with payments growing to $951 billion in FY 2025, which starts in October of this year, according to the CBO. The U.S. is projected to spend $822 billion on defense in FY 2024 and $940 on Medicare in FY 2025. (RELATED: Biden Says The Economy Is Booming. So Why Are All These Companies Laying People Off?)
Net interest is expected to be over $1.6 billion in 2034, nearly double from FY 2024, according to the report. The projected total deficit is expected to be $1.58 trillion in 2024, slightly lower than the actual $1.68 trillion deficit in FY 2023, and will increase to $2.5 trillion by 2034.
𝐇𝐨𝐥𝐲 𝐬𝐡*𝐭!
The U.S. will spend more on interest than 𝐝𝐞𝐟𝐞𝐧𝐬𝐞 or 𝐌𝐞𝐝𝐢𝐜𝐚𝐫𝐞 𝑻𝑯𝑰𝑺 𝒀𝑬𝑨𝑹!https://t.co/t2OaaQMnC1 pic.twitter.com/K8D8xfpsO1
— Marc Goldwein (@MarcGoldwein) February 8, 2024
Interest rates on the debt, which determine how much net interest needs to be paid, are expected to increase slightly to 5.1% in FY 2024 from 5.0% in FY 2023 and will decline to 4.2% and 3.3% in FY’s 2025 and 2026, respectively, according to the report. The federal funds rate has been set to a range of 5.25% and 5.50% by the Federal Reserve in an effort to bring down high inflation, placing upward pressure on interest rates across the economy, but the Fed expects to cut rates in the coming year.
The U.S. federal debt currently sits at almost $34.2 trillion, having exceeded $34 trillion in the final days of 2023, according to the Treasury Department. Over $800 billion was added to the deficit in just the fourth quarter of 2023, more than double the increase of $328.7 billion in gross domestic product.
Federal spending has been bolstered by costly initiatives by the Biden administration, such as the American Rescue Plan signed in March 2021, which authorized $1.9 trillion in economic relief for the COVID-19 pandemic. President Joe Biden also signed the Inflation Reduction Act in August 2022, which added another $750 billion in spending, including $370 billion for costly green initiatives aimed at combating climate change.
The White House did not immediately respond to a request to comment from the Daily Caller News Foundation.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.