Washington ran up roughly $3 billion a day in interest on debt held by the public last fiscal year. Five years ago the comparable bill worked out to a little over $1 billion a day.

Those daily figures are averages. When Treasury refinances a low-rate note, taxpayers can feel the difference long after Congress voted to spend the borrowed money.

The Government Accountability Office put interest expense on publicly held debt at about $1.1 trillion for the fiscal year that ended September 30. In fiscal 2021, it was $392 billion.

Two things drove that increase. Treasury owed more money, and the rates it paid lenders rose, so even renewing an old loan could cost taxpayers more than it did the first time around.

Think of a Treasury note that comes due this year. If Washington borrows to pay back the holder, whoever buys the replacement note gets the rate on offer today, even if the original note carried a far cheaper rate for years.

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That is why a change in rates can take years to work its way through the budget. The interest bill goes to the people who financed decisions Washington already made, before Congress can put a dollar toward a new road or another air traffic controller.

Treasury Secretary Scott Bessent’s department ended the fiscal year with $40.2 trillion in total federal debt on its books, more than double the $19.6 trillion recorded ten years earlier. That larger figure includes money Treasury owes to federal accounts as well as money it owes outside investors.

The auditors found that Treasury fairly presented the debt schedules and maintained effective controls over the reporting. Taxpayers can have confidence in the arithmetic and still have a serious objection to what Congress has done with their money.

The Congressional Budget Office shows how Washington added to the tab last year. Federal receipts rose by $169 billion, helped along by the income and payroll taxes collected from Americans who went to work.

Spending rose by $386 billion over the same period. Subtract the extra revenue from the extra spending and you get $217 billion, the increase in the annual deficit even though Washington collected more money than it did the year before.

Put another way, for every additional dollar that came through the door, the government raised spending by about $2.28. Overall, it spent about $7.4 trillion against roughly $5.4 trillion in receipts.

Congress has heard plenty of warnings about where this leads. By September, the debt held by the public alone was about the size of an entire year’s U.S. economic output, a share CBO says was last this high in 1946.

October brought an early look at the new fiscal year. CBO estimated a $409 billion deficit for the month, and the calendar pushed some payments ordinarily due November 1 into October because the first fell on a Sunday.

One month is a poor basis for predicting the other eleven.

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The cost of carrying yesterday’s debt has nearly tripled, and every new spending promise starts with that bill already on the table.

 

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