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The amount of money the U.S. government spends servicing its debt would surpass defense spending by 2024 and Medicaid spending by 2021, according to a study by the Committee for a Responsible Federal Budget (CRFB).
The government last year spent $263 billion on interest payments. That figure amounts to about 1.4 percent of GDP, less than the historical average of 2 percent of GDP.
Under current law, however, increased spending and wide-ranging tax cuts will significantly grow the deficit, leading annual interest payments alone to grow to $965 billion by 2028. At 3.3 percent of GDP, that would be the highest level of spending devoted to interest payments on record, CRFB noted.
For comparison, $965 billion is more than 50 percent above the Pentagon’s current budget.
Things could be significantly worse if lawmakers intervene to stop certain tax cuts from expiring, which is likely.
In that case, CRFB found, servicing the debt would cost $1.05 trillion by 2028, or 3.6 percent of GDP. That would amount to a quadrupling of the current interest payment, making debt servicing the fastest-growing category in government spending.
Interest payments do not include the amount the U.S. would have to spend to repay the principal, the actual amount borrowed before the debt costs are taken into account.