Interest on national debt on pace to eclipse entitlements, defense spending amid funding battles

Sustained deficit spending by the U.S. government helped push the national debt up to a jaw dropping $31.38 trillion in 2023, according to U.S. Treasury data. Fiscal watchdogs are now predicting that the interest alone on that debt will soon eclipse both entitlements and defense spending as a major component of the annual budget.
 

At the same time that the national debt is at a record high, interest payments in mid-2022 stood at just under $600 billion, according to a report from the Committee for a Responsible Federal Budget (CRFB).

The report, which outlines the challenges that face the next administration, projects that such payments will exceed the combined costs of Medicaid, SNAP (food stamps), and Supplemental Security Income (SSI) in late 2023, though it varies depending on interest rates.

Debt service is projected to exceed defense spending either later this year or in 2026, again contingent on interest rates. The CRFB report further pointed to the significant hike in interest rates under the Biden Administration. A 10-year Treasury note, which in 2021 came with just over a 1% interest rate. That figure now sits at 4.3%.