Key Takeaways:
- Interest must be paid every year on the national debt.
- The higher the debt, the higher the interest needed to service the debt.
- In FY 2024, interest payments exceeded national defense spending.
- High interest payments mean higher deficits which means higher government borrowing.
- High government borrowing means less money for small businesses to borrow.
- This stunts economic growth reduces tax revenue.
The numbers are staggering and incomprehensible.
How do you get your head around a debt of $37 trillion?
That was the national debt on August 12th.[1]
It’s increasing by $4,466,324,608.45 per day.
That translates to almost $134 billion every 30 days, or just over $1.6 trillion per year.
This is actually a slower rate of increase than we’ve had for the past 8 years.
President Biden added $8.4 trillion to the debt during his presidency – and before him, the debt increased by $7.8 trillion during President Trump’s first term.[2]
That’s an average of over $2 trillion per year for 8 years.
Why does any of this matter? Here are 5 reasons why this rate of debt increase is unsustainable:
- Interest payments consume too much of the federal budget.
High interest payments crowd out funding for other priorities such as:
- Infrastructure
- Healthcare
- National defense
This forces the government to borrow more money for other budget items, increasing the debt even more.
It’s a vicious, unending, snowballing cycle.
Interest payments on the national debt are now higher than national defense spending.
In FY 2024, for the first time in the nation’s history, interest on the national debt — $892 billion – was higher than defense spending — $874 billion.[3]
FY2025 ends on September 30th, but so far, interest payments are higher than defense spending again.
- High public debt stunts economic growth.
The more money the government borrows, the less money is available for businesses and private investment.
Small businesses are hurt the most – they need to borrow funds to cover start-up costs and to expand.
When fewer funds are available, interest rates for small business loans increase.
If they can’t borrow the money they need at affordable costs, they can’t grow – and some are forced out of business.
This hurts the economy and decreases government tax revenue.
Less tax revenue due to economic stagnation leads to higher deficits, which leads to expansion of the money supply, which leads to inflation – which leads to higher interest rates.
It’s a vicious downward spiral – all started by the federal government needing to borrow more and more money to service the ever-increasing national debt.
- High public debt hurts future generations.
The national debt is money we owe to private investors, large investment banks, and foreign governments.
This debt is not going to go away – it must be repaid or “rolled over” and managed through tax revenue, spending cuts, or inflation – printing money.
This means that our kids and grandkids – and future generations – will face higher taxes, reduced government services, and devalued money via inflation.
If you remember the high interest rates and the “stagflation” of the 1970s, those days will return if we don’t balance the federal budget and begin reducing the national debt.
The debt-to-GDP (Gross Domestic Product) ratio is 97% now.
The 2025 Congressional Budget Office (CBO) report on the economy projects that by 2035, the national debt will be 118% of GDP.[4]
This will mean that the economy can no longer support the debt.
This could lead to #4 below.
- High public debt reduces global confidence in the U.S. dollar.
The U.S. dollar’s status as the world’s reserve currency is dependent on global trust in the fiscal health of the federal government and the economy.
Last year (2024) the U.S. credit rating was downgraded from AAA to AA+.
The reasons cited were rising government debt and governance issues.
A lower credit rating means less trust in the U.S. government’s ability and willingness to pay back creditors on time.
This also means that foreign governments may charge a higher interest rate to buy U.S. debt – or may not offer to buy additional U.S. debt at all.
- High public debt increases the risk of a fiscal crisis.
During the COVID-19 pandemic of 2020 – 2021, the federal government borrowed $4.5 trillion.
That’s how much the national debt increased.
If interest rates had been higher when that amount of money needed to be borrowed, our interest payments today would be even higher than they are.
And we would be even closer to the current debt limit.
Congress sets an upper limit on the national debt.
On July 4th this year, the debt “ceiling” was set at $41.1trillion.
There have been times in the past when the national debt approached the debt ceiling, but Congress was deadlocked on agreeing to a new debt limit.
In 2013, the federal government shut down for 17days because the debt ceiling was reached with no new budget agreement to raise it.[5]
Government workers weren’t paid for over two weeks.
People living paycheck-to-paycheck couldn’t pay their bills.
Some retirees didn’t receive their social security checks on time.
The prospect or the threat of a default by the U.S. Treasury causes financial stress and panic not just in the U.S., but among creditors around the world who own government bonds or other U.S. debt.
Conclusion:
It’s critical that we recognize the importance of balancing the federal budget and reducing the size of our national debt.
Now is the time to write to your congressional representatives and voice your support for balanced budget legislation.
What do you think? Write me at [email protected].
Action Items:
- Vote only for candidates that will reduce the debt, not spend money that we don’t have.
- Click HERE to learn more about the national debt, deficit spending and economic policy by getting my book, The Great Deception: 10 Shocking Dangers and the Blueprint for Rescuing the American Dream.
You can order the book on Amazon HERE or get the audiobook version HERE.
You can get an autographed edition online HERE or by phone at 615-814-6633.
Or you can also send a check for $26.13 (including shipping) payable to Media Specialists and send it to this address:
Media Specialists
1313 4th Ave N
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Craig Huey is an author, speaker, podcaster, and publisher of The Huey Alert. His latest book is The Great Deception 10 Shocking Dangers and the Blueprint for Rescuing the American Dream.
[1] T.J. Muscaro, https://www.theepochtimes.com/business/treasury-says-us-debt-now-more-than-37-trillion-5900485
[2] https://www.hsgac.senate.gov/wp-content/uploads/Opening-Statement.pdf
[3] https://www.taxpayer.net/national-security/its-official-interest-payments-on-national-debt-leapfrog-military-spending/
[4] https://www.cbo.gov/publication/60870/
[5] https://en.m.wikipedia.org/wiki/2013_United_States_debt-ceiling-crisis