As the Federal Reserve raises interest rates to fight inflation, the federal government's borrowing costs on its nearly $31 trillion in debt are expected to skyrocket.
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.
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 CRFB. U.S. Federal Reserve Chair Jerome Powell and members of the Federal Reserve will use this week's consumer and producer price indeces reports to weigh raising interest rates an additional 75 percentage points when the group meets on Sept. 21.
"The growth in interest costs presents a significant challenge in the long-term as well," the Peter Peterson Foundation said.
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