President Trump has harshly criticized the Federal Reserve in recent weeks for inching up the standard interest rate to guard against rising inflation and threatening the four percent economic growth rate the billionaire likes to brag about.
Here’s another reason: The higher interest rates on your credit card balances and car loans also apply to the federal government’s borrowing.
That federal borrowing is huge, no, HUGE –about one million dollars every single minute of every single day.
By next Monday that adds up to about $955 billion this year. And another more than a trillion dollars each of the next two years, at least. Every time the Fed’s interest rate goes up a quarter-point, the government’s interest payments surge by millions.
Last year alone just the national debt’s interest costs of $263 billion consumed 6.6 percent of all government spending and 1.4 percent of the nation’s gross national product. That huge sum is actually below the historical average of recent decades.
But wait! There’s more. The Congressional Budget Office estimates the interest payments will surpass Medicaid costs within 18 months and that they will exceed all national defense spending by 2023.
By 2025, the CBO figures interest costs will surge past the combined totals of all non-defense discretionary programs together, including funding for national parks, scientific research, health care, education, the court system and infrastructure.
Between now and 2023 nearly three-quarters of the federal debt will mature and must be refinanced at whatever the presumably higher interest rates are in effect then.
Somebody needs credit counseling. And the outlook, sadly, is grim. Democrats take control of the House of Representatives next week. They have big spending plans, or at least big talk about big spending plans, for the 96-week-long propaganda run-up to the 2020 election.
Even if Donald Trump was a fiscal conservative, he might be tempted to sign some of those big spending ideas as bargaining sweeteners for Democrat agreement to his border wall and other political priorities. That’s another cost of the divided government Americans chose to elect last month.
Other than that, as you can see on the rapidly-spinning National Debt Clock here, everything seems completely under control.