The drastic and rapid increases in federal interest rates combined with high national debt have people worried about the country’s finances and what’s to come. Interest rates have been on the rise for a while now as the U.S. currently sits about $34 trillion in debt after raising rates 11 times in the last 16 months. The Fed continues to assert that cuts are coming but that doesn’t help consumer worries with rates as high as they’ve been since the 2008 financial crisis.
Right now interest payments on national debt are the fastest growing part of the federal budget and the number is projected to be bigger than medicare and defense spending by the end of 2024. Total interest on national debt is projected to hit 3.1% of GDP by the end of 2024 which would be its highest number ever. Researchers are especially worried because despite constant comments by the Fed, it seems that it is having little to no effect on the behavior of Congress.
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3 comments:
I wonder what measure is the Federal Reserve considering to address the rising interest rates. It will probably affect other areas of government spending, and I wonder if social programs, for example, will be impacted negatively by the high percentage of interest rate on national debt as a percentage of GDP. Considering that is projected roughly surpass Medicare and defense, which is quite shocking in my opinion, I feel like more potential policies should be being debated now.
If this problem continues to get worse, it feels like the government should consider raising taxes, maybe this could only impact the higher brackets. This is simply in theory but hard to execute as the wealthy will push hard against it even if it benefits the country overall.
The government is in a tricky situation because our debt continues to grow and nothing gets cut. America will not decrease its military funding and raising taxes seems unlikely as according to Professor Skoploles "It is un-American" to raise taxes. It is crazy to think that our debt is exceeding our defense spending, and our defense spending is the biggest compared to the world. Things need to change soon because the current trajectory of America's economy is not looking good.
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