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How Much Interest Do We Pay on the National Debt?
Every month, the U.S. Department of the Treasury releases data about the federal budget, including the interest costs that the federal government pays on the national debt. The following contains budget data through July 2024, the tenth month of fiscal year (FY) 2024.
Interest Payments in FY 2024
The rapid accumulation of federal debt, in addition to higher interest rates on that debt (relative to the past decade or so), has pushed up the federal government’s cost of borrowing. In fact, in the first ten months of FY 2024, interest payments on the national debt have been climbing at a faster pace compared to recent years.
- Cumulative FY24 interest payments: $763 billion
- Cumulative FY23 interest payments (through July 2023): $561 billion
As interest payments continue to rise, the federal government may have to dedicate a larger portion of the federal budget to such costs, thereby crowding out opportunities for investment in other important priorities in both the public and private sectors. Interest costs so far in FY 2024 are the second-largest spending category for the federal government — outpacing outlays for all budget functions other than Social Security.
Interest Payments over the Next 10 Years
The nation’s rising debt, and relatively high interest rates, will continue to put upward pressure on federal borrowing costs — interest costs are projected to be the fastest growing portion of the federal budget in upcoming years. The Congressional Budget Office projects that if current law remains the same, interest costs will total $12.9 trillion over the next decade, rising from an annual cost of $892 billion this year to $1.7 trillion in 2034.
In fact, by pretty much any measurement, interest on the national debt will soon grow beyond its highest level since 1940, when such data were first collected:- Relative to the size of the economy, interest costs would reach 3.4 percent of gross domestic product (GDP) in 2025 — eclipsing the previous high of 3.2 percent set in 1991. Interest costs would climb to 4.1 percent of GDP by 2034.
- As a share of federal revenues, federal interest payments would rise to 20.2 percent next year, exceeding the previous high of 18.4 percent set in 1991. They would continue climbing to nearly 23 percent by 2034.
- As a percentage of total spending, interest costs would reach 15.8 percent by 2032, eclipsing the previous high of 15.4 percent set in 1996.
Even excluding interest costs, the federal government spends more money than it collects, creating a structural problem in the budget. Debt levels rise even more quickly as interest costs are included. That debt endangers other spending priorities and even risks a fiscal crisis. Policymakers elected this year, though, have the tools to put the budget on a sustainable path.