Spending on America’s debt service is about to see a big jump, according to projections from the Congressional Budget Office (CBO).
In fact, the amount of money needed to pay down the national debt in the next two years is expected to grow nearly three times as fast as spending on national defense, which is the second fastest growing category.
While spending on Defense will increase by about $82 billion (from $634 billion to $716 billion) by 2020, debt service payments will steeply increase by $216 billion (from $263 billion to $479 billion) in the same time frame, the CBO says.
NewsRep points out that those interest payments are approaching the same level of spending as the big three in the federal budget: Social Security, Medicare and Defense. A recent New York Times report said debt service is expected to tally 13 percent of the federal budget within the next decade, compared to about 15 percent each for the big three.
While the national debt and annual deficits are constant worries in the U.S., recent concern has been exacerbated by tax cuts that didn’t include a corresponding trim of the budget. CBO notes that rising interest rates aren’t helping, especially paired with a budget for the next two years with a projected trillion-dollar deficit.
NewsRep argues it’s not just a financial issue. If the debt payments reach the point they equal spending on Medicare or Defense, that leaves little room for spending maneuverability.
“If in ten years the United States were to find itself embroiled in some new conflict, the President and Congress would have few options when it came to financing the operation,” wrote NewsRep’s Alex Benson. “With so much of the budget already absorbed by non-discretionary spending, the only options available will be to raise taxes significantly and massively blow out the debt…or influence the Federal Reserve to print more money to buy up the flood of treasuries in credit markets. All of this would occur in the context of the US government maintaining defense spending levels as a percentage of GDP that are currently well behind the Russians, for example.”
“Getting the debt under control now is not just a financial concern, it is a national security imperative, and it should be treated as such,” Benson wrote.