{"id":10996,"date":"2015-02-05T23:02:14","date_gmt":"2015-02-05T23:02:14","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=10996"},"modified":"2015-02-05T23:02:14","modified_gmt":"2015-02-05T23:02:14","slug":"interest-on-national-debt-surpasses-defense-and-nondefense-discretionary-spending","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=10996","title":{"rendered":"Interest on National Debt Surpasses Defense and Nondefense Discretionary Spending"},"content":{"rendered":"

The Legacy of Debt: Interest Costs Poised to Surpass Defense and Nondefense Discretionary Spending<\/strong><\/h2>\n

By JOSH ZUMBRUN
\nThe Wall Street Journal<\/p>\n

The U.S. has come a long way since the days of trillion-dollar deficits, just a few years ago. The\u00a0White House<\/strong>\u00a0projects 2016 will have the\u00a0smallest budget deficit<\/a>\u00a0in eight years. Yet the budgetary impact of the debt that\u2019s been accumulated\u2013$18 trillion in total, $13 trillion of that owed to the public\u2013will reassert itself.<\/p>\n

Currently, the government\u2019s interest costs are around $200 billion a year, a sum that\u2019s low due to the era of low interest rates. Forecasters at the White House and\u00a0Congressional Budget Office<\/strong>\u00a0believe interest rates will gradually rise, and when that happens, the interest costs of the U.S. government are set to soar, from just over $200 billion to nearly $800 billion a year by decade\u2019s end.<\/p>\n

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By 2021, the government will be spending more on interest than on all national defense. according to White House forecasts. And one year later, interest costs will exceed nondefense discretionary spending\u2013essentially every other domestic and international government program funded annually through congressional appropriations. (The largest part of the budget is, and will remain, the mandatory spending programs of Social Security, Medicare and Medicaid. Mandatory spending is over $2 trillion and is set to double to $4 trillion by 2025.)<\/p>\n

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The total dollars spent on defense and nondefense discretionary spending will continue to rise, albeit slowly, in the coming decade. But as a share of the economy, both categories of spending are poised to shrink for the next decade, squeezed down as interest rates rise. Mandatory spending will rise from 12.4% of GDP to about 14.5% of GDP over this period.<\/p>\n

By 2025, the White House projects interest costs will be 2.8% of GDP. The CBO is somewhat less optimistic and expects it will be 3%. Most economists and budget experts would agree that interest payments at 3% of GDP are manageable for an economy. The true cost may be the squeeze to other places the government could be spending a decade from now.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Legacy of Debt: Interest Costs Poised to Surpass Defense and Nondefense Discretionary Spending By JOSH ZUMBRUN The Wall Street Journal The U.S. has come a long way since the days of trillion-dollar deficits, just a few years ago. The\u00a0White … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-10996","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/10996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10996"}],"version-history":[{"count":0,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/10996\/revisions"}],"wp:attachment":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}