Annual Interest on National Debt Now Eclipses Entire Military Budget

Published March 18, 2024

This week, President Joe Biden released his 2025 budget request, which includes a whopping $7.3 trillion in federal spending. According to the Biden administration, the president’s latest budget demonstrates his “commitment to fiscal responsibility.”

That is absurd on its face. Never should the name “Joe Biden” and the words “fiscal responsibility” be used in the same sentence.

On January 20, 2021, the day Biden was inaugurated, the national debt registered at $27.7 trillion. A little more than three years later, the national debt now stands at $34.5 trillion.

Four years from now, the national debt is projected to reach $46.6 trillion, and that is with no new spending initiatives.

Of course, this does not mean that the Biden administration is completely to blame for the nation’s financial mess. Sadly, profligate spending is one of the few bipartisan activities that is still alive in Washington, DC these days.

However, it is certainly fair to level some blame at Biden for the spending problem becoming exceedingly worse over the past few years.

By January 2021, the United States had survived the depths of the pandemic. And, by that time, the country had already spent trillions of dollars on so-called pandemic relief measures.

Yet, that did not prevent the Biden administration from unleashing the federal spending spigot like never before. From the nearly $2 trillion American Rescue Plan to his $1 trillion Infrastructure Act, the Biden administration has not balked at increasing the size and scope of the federal government.

Meanwhile, annual interest payments on the national debt have skyrocketed. In 2020, yearly interest payments on the national debt cost the U.S. government approximately $527 billion—not a small sum. By 2024, that figure had increased to $875 billion.

In 2025, it is estimated the U.S. government will fork over nearly $1 trillion in interest payments on the national debt with that number exceeding $1.6 trillion annually by 2035. And, remember, that is if no new spending programs are initiated between now and then. In fact, it is estimated the U.S. government will spend $12.5 trillion in interest payments on the national debt over the next decade alone.

For comparison, the entire budget for the Department of Defense in 2024 was $848.9 billion. In other words, thanks to decades of reckless spending courtesy of both political parties, we now spend more money per year to service the national debt than we do on protecting our nation.

It goes without saying that the current path is unsustainable. Major structural changes must be made, the sooner the better.

For some, including Biden and almost all congressional Democrats, the answer is more taxes. In his 2025 budget proposal, Biden has included a litany of new taxes.

But, as anyone who understands basic economics and arithmetic can tell you, taxing your way out of this mess is unlikely to solve problem. In fact, more taxes, especially on job creators, would probably make the situation worse by reducing economic growth and private sector job creation.

The best solution, although not politically feasible under the current administration and Congress, is across-the-board spending cuts.

It has been more than two decades since the U.S. government last ran a budget surplus. Moreover, annual budget deficits are projected to surpass $1 trillion for years to come. This madness must end.

Fortunately, it is not too late. If the United States were to impose commonsense spending cuts, the fraught fiscal situation could be reversed rather quickly.

For instance, if the federal government were to embrace a plan that ties federal spending to the consumer price index (CPI) and benchmarked spending based on how the 50 states and similar governments around the world budget, the problem could be solved within a reasonable timeframe.

This particular plan, called CPI-X: A Novel Method to Decrease Spending and the National Debt, would work wonders and would put the United States on sound fiscal footing within a decade. It would also likely result in an economic renaissance, producing strong economic growth while decreasing taxes and improving government services.

For far too long, the U.S. government has expanded its footprint well beyond its constitutional limits and all we have to show for it is a mountain of debt, an army of bureaucrats, and a dysfunctional federal government that does more harm than good.

That does not have to continue. We the people deserve better. If all American families and each and every state and local government must live within their means, we must demand the same from the federal government.

Photo by Tracy O. Creative Commons Attribution-Share Alike 2.0 Generic.