Government Debt Service a Growing Burden for Americans

March 31, 2023 By E.J. Smith - Your Survival Guy

By William Potter @ Shutterstock.com

The cost of paying the interest on America’s debt is rapidly rising as a percentage of America’s GDP. At the Cato Institute, Chris Edwards explains that by 2030 the debt service cost on America’s debt could reach record-high levels. He writes:

As federal spending continues to rise, accumulated federal debt will soon reach all‐time highs relative to the size of the economy. Federal debt held by the public will hit 107 percent of gross domestic product (GDP) in 2028, surpassing the previous peak after World War II. The Congressional Budget Office (CBO) often highlights the rising debt‐to‐GDP ratio as a warning for policymakers to change course and avert a debt crisis.

Another warning sign of a coming debt crisis is soaring interest costs. With interest rates rising, federal interest payments have doubled from 1.2 percent of GDP in 2015 to 2.4 percent in 2023. The government will pay $640 billion in net interest this year.

The chart shows federal interest costs entering uncharted territory in coming years, based on CBO projections. Interest costs will hit an all‐time high in 2030 of 3.3 percent of GDP, surpassing the previous peak in 1991. By 2033, interest costs will hit 3.6 percent of GDP, double the peak reached after World War II.

Action Line: Burdening future generations with an ever increasing debt service cost pushes today’s problems onto America’s children. America needs to fix its spending problems now to prevent future generations from suffering. The best day to plant a tree is yesterday. The second best is today. Click here to subscribe to my free monthly Survive & Thrive letter, and we’ll weather this storm together.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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