U.S. federal debt will soon reach a point that government spending on interest surpasses the amount of money it spends on Medicaid, according to a recent Wall Street Journal report.
> Interest costs on the 2017 federal debt of $263 billion accounted for 6.6 percent of all U.S. government spending and a 1.4 percent share of the country's GDP. But the Congressional Budget Office predicts interest spending will spike to $915 billion by 2028, or about 3.1 percent of the gross domestic product. Guided by Congress' federal spending boost of $300 billion earlier this year and the Trump administration's individual income tax cuts, a divided Congress will soon be forced to spend more on interest than Medicaid, national defense and a host of other government programs.
> Analysts note the $1.5 trillion tax cut enacted last year and the two-year budget agreement to boost federal spending by $300 billion is pushing up deficits. But at the same time, interest expenses on the federal debt are climbing as bond yields rise.
The government will spend more on interest payments than it does Medicaid by 2020, Newsweek said, and by 2023, those payments will surpass the cost of national defense.
By 2025? “The government will spend more on debt interest than every nondefense discretionary federal program combined.”
> “The fact that interest is the fastest growing part of the budget and is on track to eclipse other important pieces of the budget—for instance, spending on children—is going to cause more hesitation just to charge every single item,” Maya MacGuineas, the president of the Committee for the deficit watchdog group, Responsible Federal Budget, told theJournal.