Interest on US Debt is Snowballing Says Congressional Budget Office
Interest is more than just a faith-based prohibition, its harms can be seen in creating fiscal imbalances all through out the world. The following article in Politico is of particular concern for our country and the global economic system.
Behind the fine print of new budget estimates released Tuesday is a growing — some say brutal — competition between discretionary spending by Congress and fixed interest payments owed on the growing government debt.
Indeed, the steady increase in annual interest costs is a surprisingly big reason why the Congressional Budget Office sees deficits rising in the second half of the coming decade.
Accumulated interest payments from 2014 through 2018 are $1.76 trillion under CBO’s new baseline. Interest payments for the second five years are more than double that or about $3.64 trillion.
The growth takes place in a period when CBO is forecasting a steady ratcheting down on annual appropriations in hopes of reducing future deficits. On top of cuts enacted in 2011, the new baseline assumes that a new round of across-the-board cuts scheduled for March 1 will go into effect.
The end result is that annual interest costs are predicted to have overtaken defense spending by 2020 even allowing for an extra $100 billion annually for overseas contingencies.
And there is a dramatic change in the ratio between interest payments and total discretionary outlays to run the government — including domestic programs.
In 2013, CBO estimates that discretionary outlays will total $1.2 trillion vs. $224 billion for interest: a better than 5-1 ratio. By 2023, discretionary outlays will be $1.42 trillion, according to CBO, while interest payments will have risen to $857 billion.
That’s not even a 2-1 advantage.