(NewsNation) — As the federal government’s gross national debt surpasses $34 trillion, an economist says America is paying $800 billion a year in interest payments alone.
“You know what else is about $800 billion a year? The entire defense budget is equal to the interest-only payments on our debt. I mean, this becomes insane,” Kirk Elliot, an economist, said on “NewsNation Now.”
The record-high debt foreshadows the coming political and economic challenges to improve America’s balance sheet in the coming years.
The U.S. Treasury Department issued a report Tuesday logging U.S. finances, which have become a source of tension in a politically divided Washington that could possibly see parts of the government shut down without an annual budget in place.
“It doesn’t matter who the president is,” said Elliot. “You look back, this has been going on for decades.”
The national debt eclipsed $34 trillion several years sooner than pre-pandemic projections. The Congressional Budget Office’s January 2020 projections had gross federal debt eclipsing $34 trillion in fiscal year 2029.
But the debt grew faster than expected because of a multiyear pandemic starting in 2020 that shut down much of the U.S. economy. The country’s rebound, however, came with a surge of inflation that pushed up interest rates and made it more expensive for the government to service its debts.
Those interest rates are why Elliot doesn’t see much change on the horizon.
“I believe rates are going to continue to go higher,” he said. “That’s the policy mechanism to slow down inflation: either raise rates to slow it down or cut your spending. I don’t think they’re cutting spending. I really don’t. Not in an election year.”
The Associated Press contributed to this report.
