Americans for Limited Government: gross interest on national debt will hit $1 trillion in 2024
For those Americans who look at our current economic situation with its galloping inflation and massive federal deficits and think, “well, it’s really not so bad,” we have a wake-up call for you – it really is bad when the interest on the national debt hits $1 trillion per year.
In 1981 the national debt of the United States hit $1 trillion for the first time and just six years later the United States passed, and spent, its first trillion-dollar budget. Today, those numbers are dwarfed by a budget that spends $814 billion on national defense, $821 billion on Medicare and $607 billion on Medicaid, and national debt that exceeds $31 trillion.
And according to a new study by our friends at Americans for Limited Government, authored by Robert Romano, the only single item currently on the budget that is larger than interest on the national debt is Social Security, set to hit $1.35 trillion in 2023. From there, it will continue growing dramatically: $1.46 trillion in 2024, $1.55 trillion in 2025, $1.65 trillion in 2026, $1.74 trillion in 2027 and $1.84 trillion. That’s 7.2 percent average annual growth from 2023 to 2028.
And it’s only going to get worse.
According to Mr. Romano’s study, Medicaid will keep growing, to $581.5 billion in 2025, $620 billion in 2026, $655.9 billion in 2027 and $699.2 billion in 2028.
Medicare too will keep right on growing: to $841 billion in 2024, $957 billion in 2025, $1 trillion in in 2026, $1.1 trillion in 2027 and $1.25 trillion in 2028. That’s 9.05 percent average annual growth from 2023 to 2028.
Defense and other security spending will keep growing as well: to $909.3 billion in 2024, $931.5 billion in 2025, $932 billion in 2026, $946.7 billion in 2027 and $966.8 billion in 2028.* That’s 4 percent growth from 2023 to 2028, not nearly keeping pace with so-called mandatory spending.
Mr. Romano’s study suggests gross interest owed on the debt will keep growing from $1 trillion in 2024: to $1.04 trillion in 2025, $1.1 trillion in 2026, $1.16 trillion in 2027 and $1.21 trillion in 2028. That’s 9.4 percent average annual growth from 2023 to 2028.
Now, here’s the dirty little secret that no one in the Washington Uniparty wants you to know, but Mr. Romano was only too happy to share to help raise the alarm about the situation:
…gross interest is not the number that one will normally hear reported. Gross interest owed on the debt also includes interest owed to the trust funds, but because the trust funds are government entities, the interest is counted as revenue. Additionally, interest paid on the $5.2 trillion of treasuries owned by the Federal Reserve is remitted back to the Treasury.
And so, the government tends to publicly report the so-called net interest paid on the national debt, currently at $660.6 billion in 2023.
But the gross interest still must be paid sometime by someone, right?
Nope, so far Congress has just raised the debt limit and the Treasury has simply borrowed the shortfalls in Social Security and Medicare, rather than cut spending in other areas or raise taxes.
This is one of the reasons why the upcoming congressional battle over raising the debt ceiling is so important, at over $1 trillion a year the federal interest demands on the economy are unsustainable, especially as Baby Boomers retire and start claiming their promised Social Security benefits, which are increasingly being paid with borrowed funds.
At some point the rest of the world – especially Red China – is going to decide to stop funding American defense spending, Social Security and Medicare and when they do, the whole house of cards is going to come crashing down.
We’ve pulled some key data from the Americans for Limited Government study to illustrate our points, we urge you to read the entire article through this link.
*We think due to blank check spending on military aid to Ukraine, there’s a good chance defense spending exceeds $1 trillion in 2024, so Mr. Romano’s estimate is pretty conservative.
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