(Ken Silva, Headline USA) Treasury Secretary Janet Yellen took heat for bowing to China Vice Premier He Lifeng in her trip to Beijing last week.
But Yellen has good reason to pay deference to the Chinese. Rising interest rates are straining the federal budget at an alarming rate, which means that Yellen could soon be begging one of the U.S. government’s largest creditors for money.
Indeed, the U.S. national debt increased by $1 trillion in a mere month since the borrowing ceiling was raised by Congress, and it now stands at $32.5 trillion and climbing.
The Treasury Department reportedly said Thursday that the budget deficit from October through June was nearly $1.4 trillion—a 170% increase from the same period a year earlier.
The spiraling debt problem is driven in large part by rising interest rates. The non-profit Committee for a Responsible Federal Budget published a shocking analysis the same week as Yellen’s China trip, showing that U.S. spending on interest payments is set to outpace all other federal programs.
Interest payments already hit a record $475 billion in 2022, CFRB noted. With the Federal Reserve continuing to raise interest rates in its attempt to curtail inflation, that record is set to be shattered this year and every year after that for the foreseeable future.
Interest payments over the last nine months were reportedly $652 billion. And according to the CFRB, interest payments are set to grow to $1.4 trillion by 2033, then to $2.7 trillion by 2043 and $5.4 trillion by 2053.
“By 2051, spending on interest will be the single largest line item in the federal budget, surpassing Social Security, Medicare, Medicaid, and all other mandatory and discretionary spending programs,” the fiscal watchdog warned.
“By the end of the next three decades, interest will consume 6.7% of GDP and 35% of federal revenues annually.”
Despite the skyrocketing interest payments, spending cuts don’t seem to be on the agenda for the Biden administration or Congress.
The combination of rising interest rates and a spend-happy government has many economists predicting fiscal doom.
“How this will play out remains unclear. But we can say this with confidence: the spending will continue,” wrote Michael Maharrey, the managing editor for the SchiffGold blog. “The debt will continue to rise. And if the Fed keeps rates elevated, paying the interest on the national debt will become a big problem for Uncle Sam.”
Ken Silva is a staff writer at Headline USA. Follow him at twitter.com/jd_cashless.
