Payments on Interest to Exceed Defense Spending by $125 Billion
Daniel Halper
October 23, 2012 11:49 AM
In a decade, federal spending to pay for the interest on America's debt will exceed total spending on the defense budget by $125 billion, or 20 percent, according to projections from the Congressional Budget Office and the Office of Budget Management. The projections are based on President Barack Obama's current budget plan.
Here's a chart from the Republican side of the Senate Budget Committee that shows 2022 national defense spending vs. net interest payments:
In 2022, under Obama's budget, national defense spending will be $618 billion per year, while net interest payments will be $743 billion.
In fact, the interest payments are likely to be even higher, since these assumptions are based on the historically low interest rates remaining the same (which is not likely over the course of the next decade). "If interest rates rise just one percentage point above baseline projections, the government would pay an additional $1 trillion in interest payments over ten years," the Republican side of the Senate Budget Committee comments.
"President Obama’s FY 2013 budget proposal has two primary impacts on fiscal policy: a $1.8 trillion increase in new taxes (twice what the White House publicly suggests) and a $1.4 trillion increase in spending above already-massive growth projections," the committee explains. "This nets a paltry $400 billion in deficit reduction over ten years, or just one-tenth of the pledged $4 trillion. As a result, America’s gross debt under the President’s plan, as reported by his own Office of Management and Budget (OMB), will rapidly climb $25.4 trillion in 2022—$10.6 trillion above where it stood at the end of 2011. In other words, the President’s core budget claim – that he has a ‘balanced’ plan to reduce the deficit – is provably and outrageously false. He raises taxes to fuel a gigantic spending increase in Washington."
Here's a chart from the Republican side of the Senate Budget Committee that shows 2022 national defense spending vs. net interest payments:
In 2022, under Obama's budget, national defense spending will be $618 billion per year, while net interest payments will be $743 billion.
In fact, the interest payments are likely to be even higher, since these assumptions are based on the historically low interest rates remaining the same (which is not likely over the course of the next decade). "If interest rates rise just one percentage point above baseline projections, the government would pay an additional $1 trillion in interest payments over ten years," the Republican side of the Senate Budget Committee comments.
"President Obama’s FY 2013 budget proposal has two primary impacts on fiscal policy: a $1.8 trillion increase in new taxes (twice what the White House publicly suggests) and a $1.4 trillion increase in spending above already-massive growth projections," the committee explains. "This nets a paltry $400 billion in deficit reduction over ten years, or just one-tenth of the pledged $4 trillion. As a result, America’s gross debt under the President’s plan, as reported by his own Office of Management and Budget (OMB), will rapidly climb $25.4 trillion in 2022—$10.6 trillion above where it stood at the end of 2011. In other words, the President’s core budget claim – that he has a ‘balanced’ plan to reduce the deficit – is provably and outrageously false. He raises taxes to fuel a gigantic spending increase in Washington."
Overall, his budget would increase federal spending 58% - from a budget size of $3.6 trillion today to $5.9 trillion in 2022, and increase gross federal debt by 72 percent.The result of all this debt is that interest payments on the debt are one of the fastest growing budget items. We will be borrowing money just to pay the interest on the money we’ve previously borrowed. By the year 2019, we will actually be paying more in annual interest payments than in annual defense spending. By the last year of the President’s budget, interest payments will exceed our nation’s entire defense budget by 19 percent.
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