newp2ecryptogames| Interest on U.S. government bonds may exceed defense spending for the first time this fiscal year

The United States has long had the largestnewp2ecryptogames's defense budgetnewp2ecryptogames, spending this year will be close to $900 billion.

However, that spending is rapidly being overtaken by the fastest-growing part of the federal budget-interest payments on the national debt.

In the first seven months of fiscal year 2024, which began in October last year, net interest payments on U.S. Treasury bonds totaled US$514 billion, US$20 billion higher than defense spending during the same period. Budget analysts believe this trend will continue, making fiscal 2024 the first time in U.S. history that interest payments on Treasury bonds exceed defense spending.

Just two years ago, interest expenses were the seventh largest expenditure category in the U.S. federal budget, behind spending on social protection, health programs other than Medicare, income assistance, defense, Medicare and education.

Interest expenses are now the third-largest expense after social security and medical care. This is not because any other project is shrinking. While most government spending is growing moderately every year, interest expenses in fiscal 2024 will be 41% higher than fiscal 2023.

There are two obvious reasons for the inflation in interest expenses.

The first is the surge in annual deficits, which has led to a total of 34 per cent of the U.S. federal debtnewp2ecryptogames.6 trillion US dollars, 156% higher than the size of national debt at the end of 2010.

In the 1990s, the average annual federal deficit was $138 billion. In the 2000s, that figure was $318 billion. In the 2010s, that figure was $829 billion. Since 2020, the annual deficit has ballooned to 2.5 percentnewp2ecryptogames$24 trillion, mainly due to pandem-related stimulus measures in 2020 and 2021. The budget gap for 2024 is US$1.5 trillion.

The annual deficit as a percentage of GDP has almost doubled in just 10 years, rising from 2.8% in 2014 to a projected 5.3% in 2024. So there are more loans that need to pay interest.

As interest rates have soared over the past two years, so have the government's borrowing costs. Like consumers who buy homes and cars, the U.S. government benefits from cheap money when interest rates are low and carries a heavier burden when interest rates are high.

From 2010 to 2021, the average interest rate on all U.S. Treasury bonds sold to the public is just 2.1%, which helps keep total interest payments under control.

But in 2022, the Federal Reserve began raising interest rates to curb inflation, and the average interest rate paid by the government is now 3.3%. As a result, the amount of borrowing continues to rise, and the cost of borrowing is also rising.

More taxpayers 'money will be used for interest expenses, which will eventually reduce the amount of money used in other aspects, and at some point, the U.S. Treasury will no longer be able to borrow to solve the problem.

This is an unsustainable situation that could cause investors to lose confidence in the government's credibility and demand higher interest rates to buy U.S. Treasuries.