Stop the spending and pandering for votes!

Crossville TN

Description

While most of the recent attention on the U.S. central bank has been focused on whether policymakers will succeed in reducing prices without dragging the economy into a recession, there is another major consequence of higher interest rates: Potential damage to the U.S. government's finances. That is because as interest rates rise, so too will the federal government's borrowing costs on its $30.89 trillion in debt. 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. As a share of the economy, total interest on the national debt will hit a record 3.3% of GDP, the broadest measure of goods and services produced in the country, by 2032, the CBO estimated. 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 Committee for a Responsible Federal Budget, a nonpartisan group that advocates for reducing the federal debt. Fed policymakers have already approved four consecutive rate hikes this year – including two mega-sized 75-basis-point increases in June and July – and have signaled they are nowhere close to stopping as they try to crush runaway inflation. The central bank is widely expected to approve another three-quarter percentage point hike at its meeting next week, or even vote to lift rates by a historic full-percentage point.