US government to spend more on debt than on military within a decade

Seabee
is participating in the endurance course at the Jungle Warfare
Training Center in Okinawa, Japan.
US
Navy photo by Mass Communication Specialist 2nd Class Adam
Henderson

• The US government could spend more on debt then it does on
  the military with interest payments set to make up 13% of the
  federal budget a decade from now,
  The New York Times reported.
• The increase in borrowing costs has been brought on after a
  need to finance a rapidly growing budget deficit, made worse by
  tax cuts rising interest rates.
• The cost of interest is on track to be $390 billion next year
  which is nearly 50% more than in 2017, and it is already the
  fastest growing government expense, the Congressional Budget
  Office said.
• The deficit is soaring despite a booming economy, a situation
  economists say is uncharted territory.  

The US federal government could soon spend more on interest for
its debt then on the military, The
New York Times reported.

Interest payments are expected to make up 13% of the federal
budget a decade from now, up from 6.6% in 2017. Tax cuts,
spending increases and rising interest rates will make it more
difficult to respond to future recessions or spend on other
needs, the Times said. 

More than $900 billion in interest payments will be due annually
within a decade, outpacing increases in government military
spending, according to the Congressional Budget Office.

“It’s very much something to worry about,” C. Eugene Steuerle, a
fellow at the Urban Institute and a co-founder of the
Urban-Brookings Tax Policy Center in Washington told The New York
Times. “Everything else is getting squeezed.”

The cost of interest is on track to be $390 billion next year
which is nearly 50% more than in 2017, and it is already the
fastest growing government expense, the Congressional Budget
Office said.

Rising interest rates would have made the nation’s debt more
expensive even without extra debts. But the tax cuts which were
passed in late 2017 have increased the pressure on the federal
budget and widened the deficit. 

Next year, the deficit is expected to reach nearly $1 trillion,
the first time it has been that large since 2012, when the US was
still recovering from the financial crisis and rates were near
zero.

In February, a bill was approved to raise federal spending by
$300 billion over 3 years, which will further increase the
financial burden. The Congressional Budget Office said that
interest payments on the national debt are expected to triple
over the next decade.

And Washington Republicans introduced legislation this month that
would make the tax cuts permanent.

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

Marc Goldwein, senior policy director at the Committee for a
Responsible Federal Budget, told the Times: “By 2020, we will
spend more on interest than we do on kids, including education,
food stamps and aid to families.” The committee is a research and
advocacy organization. 

In the past, government borrowing went up during recession and
went down during recoveries. Today, the deficit is soaring
despite a booming economy. This means there would be less room to
react in the event of another downturn.

The situation represents a journey into mostly uncharted
financial territory, economists told the Times.