Interest on the U.S. national debt has grown so rapidly that it is now consuming nearly half of all individual personal income taxes. So far this fiscal year, about 39 cents of every dollar paid in individual income taxes has gone toward paying down the interest on the debt, according to new calculations published by the Committee for a Responsible Federal Budget. The problem may soon get worse.
"You can think of the increase in net interest payments as two-thirds resulting from higher rates and one-third as a result of the amount of debt," CBO Director Phillip Swagel told reporters in February. For years, the U.S. has been able to borrow cheaply as interest rates have remained historically low. However, as the federal funds rate has increased, so have short-term rates on Treasury securities, making federal borrowing more expensive.
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