The Congressional Budget Office on Monday revealed that the cost of payments on the federal debt soared 41 percent in the first six months of the fiscal year thanks to higher interest rates — driving the deficit up to $1.1 trillion over the period.
Under President Biden, massive spending has fueled not only high deficits but also inflation. The Federal Reserve Board has pursued an aggressive rate-increasing campaign to try and tame inflation, but one of the risks was always that this would further exacerbate the nation’s fiscal problems by adding to the cost of interest payments on the debt. And there is now evidence this is exactly what’s happening.
In its latest monthly budget review, which catalogues the first six months of the fiscal year that began last October 1, the CBO flags interest payments as one of the largest single contributors to the overall increase in spending:
Net outlays for interest on the public debt increased by $90 billion (or 41 percent), mainly because interest rates are significantly higher than they were in the first six months of fiscal year 2022.
In February, CBO projected that by the end of the decade, the federal government would spend more on interest payments than on defense.