The U.S. Government To Fork Out A Half Trillion To Service Its Debt In 2018
The U.S. Government is going to surpass another significant milestone this year. According to the recently released data from the TreasuryDirect.gov, the government will fork out a stunning half trillion dollars just to service its debt in 2018. Unfortunately, as U.S. interest rates rise, along with ever-expanding public debt, the cost to service the debt will continue to increase.
In just the first nine months of the year, the U.S. interest expense has increased by an additional $40 billion. Last year, the U.S. Government paid only $375 billion to service its debt from October to June, but this year it has jumped to $415 billion:
Now, if we consider that the U.S. Treasury paid $83 billion in interest expense for the three remaining months last year, and add it to the current total, it would equal $498 billion. However, the U.S. interest expense is up over 10% already. So, if we assume that the interest expense for July-Sept will also be up 10%, then the estimated total debt service for fiscal 2018 will reach $506-$510 billion.
A half a trillion dollars to service one’s public debt is truly a staggering figure. Since 2012, the U.S. interest expense has increased from $360 billion to an estimated $500+ billion this year:
Interestingly, the U.S. debt service in 2000 of $361 billion was higher than the $360 billion in 2012. The U.S. government paid more interest payments in 2000 because of a much higher interest rate of 6.6%, even though the public debt was only $5.6 trillion. In the chart below, we can see how the falling interest rate and higher debt kept the U.S. debt service from exploding:
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