August 20, 2014

Interest on Federal Debt Plunged in Fiscal 2009, Even as Borrowing Soared

October 18, 2009
CQ

Excerpt

Treasury on Friday released the final figures for fiscal 2009, announcing a $1.417 trillion deficit for the year. That’s roughly in line with CBO’s Oct. 7 estimate of $1.409 trillion.

Federal interest payments fell 15 percent to $383.4 billion in the year ended in September, even as the U.S. debt rose 18 percent to $11.9 trillion. That borrowing filled the gap as federal spending rose 18 percent to $3.522 trillion, while revenues fell 17 percent to $2.105 trillion. Budget hawks warn that there is some peril to the United States from its currently enviable credit situation, in which investors have willing accepted little return on their money in exchange for the safe haven of Treasury securities. Lawmakers may not be getting a clear signal of how interest payments on the federal debt will devour Treasury’s coffers in the near future. “What the public and policymakers need to come to grips with — quickly — is that annual interest payments will grow rapidly in the next decade and are projected to reach $800 billion by 2019 — equivalent to more than a third of all individual income tax receipts for that year,” said Charles S. Konigsberg, chief budget counsel at the nonprofit Concord Coalition.