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Fed interest rate hikes poised to make the US national debt even more expensive
Americans should be ‘concerned’ about national debt, affects ‘every taxpayer’: Rep. French Hill
Rep. French Hill, R-Ark., reacts to national debt surpassing $30 trillion.
The Federal Reserve is leading a ruthless campaign to crush persistently high inflation with the most aggressive interest rate hikes in decades.
While most of the recent attention on the U.S. central bank has been focused on whether policymakers will succeed in reducing prices without dragging the economy into a recession, there is another major consequence of higher interest rates: Potential damage to the U.S. government's finances.
That is because as interest rates rise, so too will the federal government's borrowing costs on its $30.89 trillion in debt.
Interest payments on the national debt are already projected to be the fastest-growing part of the federal budget in fiscal year 2022, according to the Congressional Budget Office. Payments are expected to triple from nearly $400 billion in fiscal year 2022 to a stunning $1.2 trillion in 2032 – a total of $8.1 trillion over the next decade.
INFLATION ROSE FASTER THAN EXPECTED IN AUGUST, KEEPING PRICES PAINFULLY HIGH
As a share of the economy, total interest on the national debt will hit a record 3.3% of GDP, the broadest measure of goods and services produced in the country, by 2032, the CBO estimated.
In reality, the payments could be even steeper; current interest rates are already higher than those included in the CBO estimate from May, according to the Committee for a Responsible Federal Budget, a nonpartisan group that advocates for reducing the federal debt.