In the labyrinth of U.S. fiscal affairs, a concerning trend has emerged: the ballooning interest expenses on the national debt, surpassing critical social expenditures and casting shadows of uncertainty over the nation’s financial future.
In 2023, net interest costs on U.S. debt skyrocketed to a staggering $659 billion, exceeding the budgets allocated for vital programs such as Medicaid and Spending on Children, both hovering around $600 billion. Astonishingly, this amount more than triples the expenditure on Veterans, a segment that received approximately $180 billion in funding. Even when Veterans’ Programs and Income Security Programs are combined, their total cost remains dwarfed by the colossal interest expenses incurred by the nation.
Fast forward to the onset of 2024, and the U.S. has already squandered a jaw-dropping $350 billion in net interest expenses within a mere three months. What’s even more alarming is the apparent absence of a coherent long-term plan or meaningful discussions within Congress to address this burgeoning crisis.
The trajectory of annualized interest expenses over recent years is particularly unsettling, signaling a dark and foreboding future. With no discernible path towards a balanced budget, the Treasury continues to issue debt at elevated interest rates, exacerbating the already dire situation.
Delving deeper into the mechanics behind this fiscal quagmire, February 2024 witnessed a staggering issuance of over $2.5 trillion in U.S. Treasury securities. In 2023 alone, the Treasury churned out a whopping $22.7 trillion, surpassing the figures from the preceding years, including 2020.
This leads us to ponder: What impact do these Treasury issuances have on the yield curve, a crucial barometer of economic health and monetary policy effectiveness?
Sources:
Interest expense is offically larger than Medicaid in the United States:
Net interest costs on US debt hit $659 billion in 2023.
This was more than Medicaid and Spending on Children which bot sat around $600 billion.
That's more than TRIPLE the amount spent on Veterans which… pic.twitter.com/diK2gjnKVG
— The Kobeissi Letter (@KobeissiLetter) April 1, 2024
fred.stlouisfed.org/series/A091RC1Q027SBEA
Impact of Treasury Issuances on the Yield Curve
In February 2024, there were over $2.5 Trillion U.S. Treasury securities issued. In 2023, there were $22.7 Trillion issued, which is more than what was issued in 2020.
We decided to take this opportunity to provide a brief… pic.twitter.com/2lKmVEAoUJ
— Reef Insights (@ReefInsights) March 26, 2024