The Rising Cost of the National Debt
Eventually, we are going to have to elect leaders who will take this seriously
Way back in 2011, while I was a grad student at Ole Miss, I wrote a letter to the editor that was published in the Oxford Eagle. The subject? Interest on our national debt. At the time, I cited a statistic that the federal government was paying about $20 billion per month in interest on public debt. That estimate was actually a little low, but has further exploded over the last decade.
Last year, the federal government spent $659 billion paying off the interest on the national debt.1 But, as interest rates and the underlying debt continue to rise, those interest payments are spiking. As you can see in the chart above published by the Federal Reserve Bank of St. Louis2, the monthly rate is rapidly approaching $1 trillion in interest annually.
As I discussed in my letter to the editor 13 years ago, those interest payments operate just like credit card interest. When Brooke and I got married back in 2010, we had credit cards and we didn’t have the best budgeting practices. We tried to “be reasonable” and pay off our credit cards from month-to-month, but quickly found ourselves running behind. Fortunately, we recognized the issue before it got out of hand. We took a Dave Ramsey class at church, tightened down on our budget, and paid off the credit cards and cancelled them so we wouldn’t be tempted to go down that road again.
Years later, after we had gotten much better at budgeting and developed better habits with our spending, we opened up a credit card again. This time, we committed to paying it off and never maintaining a balance. We just don’t like having that debt hanging out there, and more importantly, we appreciate not having to pay hundreds of dollars in interest that is taken out of our pockets and put into the pockets of the credit card company.
I wish our federal government would apply the same principles. Instead, they are racking up debt like a teenager playing with daddy’s credit card. Let’s just use the $659 billion the federal government paid in interest last fiscal year (not factoring in they are probably going to pay much more than that this year). That is $659 billion the federal government had to pay out last year. Where did that money come from? Tax dollars. Our pockets.
$659,000,0000,000.00
That’s $1,961.93 for every single person in the United States (including children).
That’s $3,994.01 for every single taxpayer in the United States.
That’s $11,895.31 per school-aged child in the United States, $205,937.50 per public school teacher, and $5,033,223.86 per public school in the United States.
That’s $1,009,027.66 per homeless person in the United States.
For what we are currently spending on interest payments, we could end homelessness in the United States. We could build a brand new state-of-the-art school building for every K-12 public school and still have enough leftover to pay every teacher a six-figure income. Or, we could just send everybody a check for nearly $2,000.00.
Instead, we are spending it on interest to whoever holds those bonds. About a quarter of that debt is held by foreign countries.
THAT is the true cost of the national debt. Unfortunately, fixing this problem would require a disciplined effort across decades. And, even worse, neither the Republicans nor the Democrats seem to have any appetite to tackle this problem any time soon.
U.S. Bureau of Economic Analysis, Federal government current expenditures: Interest payments [A091RC1Q027SBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A091RC1Q027SBEA, January 19, 2024.