Interest Costs
June 01, 2011

SOURCES: Data from the Office of Management and Budget, Budget of the United States Government: Fiscal Year Budget, 2012, Historical Tables, February 2011; and the Congressional Budget Office, Long‐Term Budget Outlook: June 2011. Compiled by PGPF.

Looking forward, rising federal debts are projected to impose a significant interest burden- making up over three quarters of the budget gap in 2080. Such large interest payments will make it virtually impossible for us to invest as much in our future. So far, we have largely covered our interest costs through more borrowing. But we won’t be able to do that forever. At some point, we will need to raise taxes and cut spending to cover those costs. And if interest costs are allowed to grow to high levels, those tax increases and spending cuts could be large. Those high tax rates and reduced spending (especially on education, skills training, R&D and infrastructure) could weaken our economy and make it less competitive.

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Related Charts:

Interest Costs and Revenues Comparison
Discretionary Spending Projections
Federal Deficits Projection
Debt Under Two Scenarios

Peter G. Peterson Foundation Chart Pack:

The PGPF chart pack illustrates that budget-making involves many competing priorities, limited resources, and complex issues. In this set of charts, we aim to frame the financial condition and fiscal outlook of the U.S. government within a broad economic, political, and demographic context.
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