US National debt: government have spent over a trillion dollars in interest payments

The government has paid 1,049 trillion dollars on debt service

US government pays huge interest payments for this country has debt. It is revealed that it reached more than one trillion this year. The national debt is around 35,3 trillion, as the Treasury Department reports.

With the Federal Reserve keeping interest rates at their highest in 23 years, the government has spent $1.049 trillion just to cover interest on its debt. That’s a 30% increase from last year, and the total for the year is expected to reach $1.158 trillion^[1].

While the interest the government earns from investments is subtracted, these payments total $843 billion. The government fiscal year only has a month left. Student debt forgiveness caused a huge difference between August last year's shortfall. Last year it was 89 billion, and this year, it came to 380 billion dollars.

The Federal Reserve is expected to lower its rates this month. However, it might only lower them by a quarter percentage point. Since the presidential elections are coming soon, this should have a notable impact on the country's finances.

However, candidates have different ideas and plans for the problem^[2]. Kamala Harris focuses on supporting lower—and middle-income families. She plans to expand tax credits and talks about promising to raise corporate taxes to help fund her new initiatives. Harris also supports the idea of supporting first-time homebuyers and boosting homeownership and economic growth.

On the other hand, Donald Trump announced his proposals for tax cuts. He advocates for a permanent extension of the expanding provision of the 2017 Tax Cuts and Jobs Act. His campaign's approach is projected to increase the national debt by $5.8 trillion over the next ten years. Trump plans to decrease federal revenues. While this might benefit households in various income groups, such cuts could place a burned on future generations and lead to long-term economic challenges.

The Covid-19 pandemic, Medicare, tax cuts: why is the US in such a debt?

Student loans, mortgages for a house, and other credits are becoming normal for everyday people because not every person can have as much money as purchasing a house requires, and not every parent can finance children's schools.

Paying off debts is normal, but it feels more worrying when your country is in debt. So, how did the U.S. get here? The U.S. government is in debt primarily because it spends more money than it brings in through taxes. The federal government annually funds many programs, services, and defense activities.

However, its expenditures often outpace the tax revenue, creating a deficit gap. Over time, these deficits build up, leading to a massive national debt. Much of this spending is non-negotiable. For example, programs like Social Security, Medicare, and Medicaid are mandatory.

As the population ages, these programs get more expensive, and they aren't subject to yearly adjustments, making it hard to cut costs in the short term. In addition to this, there is a high level of military spending, which is essential for defense but contributes significantly to the federal budget deficit.

In economic crises like the 2008 financial collapse or the COVID-19 pandemic, the U.S. government had to increase spending even more. It needed to stimulate the economy and support businesses and citizens in need. These emergency measures were funded by borrowing, further deepening the national debt.

Another contributing factor is tax cuts, like the 2017 Tax Cuts and Jobs Act. While these cuts reduce the tax burden on individuals and businesses, they also lower the government’s revenue, increasing the deficit when spending isn’t equally reduced. Trade deficits, where the U.S. imports more than it exports, also force the government to borrow more from foreign lenders.

Why this debt is bad news for US citizens?

Political challenges make addressing the deficit even harder. Reducing spending on popular programs like Social Security or raising taxes is politically difficult. This often results in gridlock, preventing necessary fiscal reforms.

The growing national debt affects more than just the government; it impacts everyday citizens as well. As the debt increases, so do the interest payments that the government must make. In 2024 alone, the Congressional Budget Office (CBO) projects that interest payments will total $892 billion. By 2034, this figure could climb to $1.7 trillion^[3].

What does this mean for people? It means the government will spend more on paying off interest than on essential services like Medicaid, veterans' benefits, and income security programs that help lower-income Americans. Federal spending on children’s programs and infrastructure projects, such as education and transportation, will also outpace this.

By the end of 2024, the U.S. will spend more on interest payments than on national defense, which is historically one of the largest parts of the budget. By 2025, interest costs will surpass Medicare spending for a few years. This shift means fewer resources will be available for programs directly benefiting citizens.

As the government continues to borrow to cover these costs, future generations will feel the weight of today’s debt. Higher debt can lead to slower economic growth, increased taxes, or cuts to vital programs. The longer the debt grows, the harder it becomes to manage, creating a difficult-to-break cycle.

Ultimately, the national debt is not just a government problem—it’s a challenge that affects everyone.