Uh, Obama? We Have a Problem: Interest Expense to Hit $1 Trillion in 4 Years
I hate to interrupt Obama’s “We Don’t Have a Spending Problem” World Tour. But reality intervened on Tuesday as the Congressional Budget Office released a report that says that the budget deficit will grow through 2023 and “will eventually require the government to raise taxes, reduce benefits and services, or undertake some combination of those two actions,” reports CBSNews- and all of that just to cover interest payments.
“In its annual Budget and Economic Outlook,” writes CBSNews, “the CBO said debt held by the public will be bigger by 2023 than in any year since 1951 and will be at 77 percent of gross domestic product (GDP) by 2023, far above the 40-year average of 39 percent of GDP. As a result, the CBO report said, the federal government’s interest costs ‘will be very high’ and will be rising. Interest costs will more than double by the end of the ten-year forecasting period.”
The CBO projects that interest rates on the Ten-Year Treasury Note will rise from 2.1 percent currently, to 5.2 percent in 2017.
In December, the Treasury Department reported that total interest bearing debt owed by the government carried an interest rate of 2.523 percent. Last year’s interest payments on that debt totaled $360 billion. If interest rates overall reflect the CBO’s forecast for the benchmark, interest rates payments alone will reach one trillion dollars by 2017.
Just current debt would require interest payments of 2.5 times 2012 levels or $890 billion. You can add another $100 billion in interest costs for deficits accumulated between 2013 and 2017. |
