If President Joe Biden and the federal government decided to recklessly spend with credit cards without paying off the balances, they would see their debt grow quickly due to high interest rates. Unfortunately, this scenario isn’t far from reality, as the national debt has surged from about $27 trillion to $34 trillion since Biden took office and is on track to hit $35 trillion soon.
This massive debt is a serious concern because it restricts how the government can allocate money to other important areas. Currently, a significant portion of the government’s budget is being used just to cover the interest on this debt, which is increasing faster than any other budget item.
In fact, during the first seven months of this fiscal year, the amount the government spent on interest exceeded what was spent on defense and Medicare. Only Social Security accounted for a larger slice of the budget, but soon, interest payments might surpass all other expenses.
The Committee for a Responsible Federal Budget reports that the interest on the debt nearly doubled from $345 billion in 2020 to $659 billion in 2023. This year, the government will spend more on interest than it does on education, transportation, and veterans’ services combined.
Experts have long warned that the government needs to get its growing debt and annual deficits under control, especially now that interest rates remain high. High interest rates mean that the debt becomes even more expensive to manage, leading to a cycle of rising costs.
Under Biden’s administration, inflation has reached a 40-year high. Several factors contribute to rising inflation, but the extensive spending by Biden and Congress is a major factor.
President Donald Trump also contributed significantly to the national debt, adding about $8 trillion, half of which was due to the government’s response to the COVID-19 pandemic. However, Trump’s pre-pandemic spending was less than Biden’s current expenditures.
In addition to the soaring debt, there are looming issues like the insolvency of Social Security and Medicare. These programs are crucial, especially for older voters, but neither Biden nor Trump has seriously addressed how to reform these systems.
If the government does not act swiftly, Social Security and Medicare will start to see automatic reductions in the coming years. According to recent reports from their trustees, Social Security could face a 21% cut in just nine years, and Medicare cuts could happen within 12 years. Michael Peterson, CEO of the Peter G. Peterson Foundation, has stated that ignoring these problems puts many people at risk, creates economic uncertainty, and exacerbates fiscal challenges.
