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Interest payments to surpass Medicare spending

The U.S. national debt has alarmingly exceeded $34 trillion, leading to significant interest payment obligations.

The Congressional Budget Office (CBO) reported a sharp increase in net interest payments on the debt over the years, escalating from $223 billion in fiscal year 2015 to $659 billion in fiscal year 2023.

For fiscal year 2024, the CBO projects that the U.S. government will spend $870 billion on net interest payments, surpassing expenditures on national defense ($822 billion) and Medicare ($851 billion). This would make net interest payments the second-largest budget item, trailing only behind Social Security, noted the Committee for a Responsible Federal Budget (CRFB)

The non-partisan think tank emphasized the need for "thoughtful deficit reduction" to mitigate interest costs and warned that without such action, debt will “represent a growing threat to our economy, our health care system, and our national security.”

In fiscal year 2023, which ended Sept. 30, 2023, the federal government spent $6.13 trillion and collected $4.44 trillion in revenue, resulting in a deficit of $1.7 trillion.

This pattern of deficit spending, where expenditures exceed revenue, has continued into fiscal year 2024. The federal budget deficit has already exceeded $531 billion as of Feb. 2024.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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