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.
E.J. Smith - Your Survival Guy
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