A bronze seal is seen next to a door at the U.S. Treasury Department building in Washington, U.S., Jan. 20, 2023.
Kevin Lamarque | Reuters
The U.S. government has spent more than $1 trillion this year on interest payments on its $35.3 trillion national debt for the first time, the Treasury Department announced Thursday.
With the Federal Reserve holding benchmark interest rates at 23-year highs, the government has put $1.049 trillion toward debt service, up 30% from the same period last year and part of an expected $1.158 trillion in payments for the full year.
If we subtract the interest the government earns on its investments, net interest payments amounted to $843 billion, more than any other category except Social Security and Medicare.
The jump in debt service costs came as the U.S. budget deficit rose in August, approaching $2 trillion for the full year.
With one month left in the federal government’s fiscal year, the deficit in August rose by $380 billion, a sharp decline from the $89 billion surplus in the same month a year earlier, which was largely due to accounting maneuvers that included forgiving student debt.
That would push the budget deficit in 2024 to nearly $1.9 trillion, or a 24% increase from the same point last year.
The Fed is widely expected to cut interest rates next week, but only by a quarter of a percentage point. However, in anticipation of more moves in the coming months, Treasury yields have fallen in recent weeks.
The standard 10 year bond U.S. bonds are yielding about 3.7%, down more than three-quarters of a percentage point since early July.
