Twenty-five percent of all US government debt outstanding has been added since the beginning of 2020. Interest payments are starting to dominate the US budget. Spending has moderated since the peak of the pandemic but is now at a permanently higher level. Debt servicing costs have doubled in the last few years and are expected to get worse. The figure from the Peter G Peterson Foundation shows the share of GDP interest payments are projected to take of GDP. And this assumes rates return to lower levels in the future, which with higher inflation seems unlikely.
Source: Peter G. Peterson Foundation
Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.
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