Debt Crisis: U.S. Will Soon Spend More on Interest Than Military—Should Congress Act?

• Inside of 10 years, the federal government could be paying more in interest on its debt than it spends on the military.
• This is caused by the U.S.’ rapidly growing budget deficit, which has been exacerbated by tax cuts and rising interest rates.

Why it matters

The New York Times notes:

“With less money coming in and more going toward interest, political leaders will find it harder to address pressing needs like fixing crumbling roads and bridges or to make emergency moves like pulling the economy out of future recessions.”

The White House’s midyear budget estimates that the federal deficit will surpass $1 trillion in 2019. According to our partners at USAFacts, a non-partisan, not-for-profit civic initiative aimed at making government data accessible and understandable, that would be a substantial increase over the $584.6 billion deficit in 2016.

A deficit must be paid. If it isn’t, then it creates debt. Each year’s deficit adds to the debt. As the debt grows, it increases the deficit in two ways:

• Debt interest must be paid each year. This increases spending while not providing any benefits.
• Higher debt levels can make it more difficult to raise funds. Creditors become concerned about the government’s ability to repay the debt. When this happens, they demand higher interest rates to provide a greater return on this higher risk.

Federal government debt has exploded from $2.7 trillion in 1980 to almost $20 trillion in 2016, according to USAFacts.

More than $297 billion went to paying interest on the debt in 2016, and that number has risen to $316 billion this year, according to the Congressional Budget Office (CBO). By 2028, debt service is expected to cost $915 billion ― considerably more than the U.S.’ 2017 military budget.

National defense spending in 2017 totaled $728.9 billion (adjusted to 2016 dollars for comparison), a decrease from $916.6 billion in 2010, according to USAFacts. Interest payment are projected to overtake the Department of Defense budget by 2023.

According to The New York Times:

“Deficit hawks have gone silent, even proposing changes that would exacerbate the deficit. House Republicans introduced legislation this month that would make the tax cuts permanent.

“’The issue has just disappeared,’ said Senator Mark Warner, a Virginia Democrat. ‘There’s collective amnesia.’”

The Times article notes that lawmakers’ concerns about the deficit tend to shift depending on which party is in power.

What do you think?

Should Congress work to bring down the deficit? If so, by what means? Tell your reps what you think, then share your thoughts below.

—Sara E. Murphy

(Photo Credit: iStock.com / AUDINDesign)