The US government is projected to spend $892 billion alone on net interest for debt in 2024 — more than for defense and almost as much as Medicare. Why that's a big problem

The CBO projects debt to continue to climb

America’s debt is predicted to continue ballooning in the coming years, even after exceeding $34 trillion for the first time in history this past winter.

“The U.S. federal government's on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy,” Federal Reserve chair Jerome Powell said in an interview with 60 Minutes in February.

“It's probably time, or past time, to get back to an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path.”

The CBO forecasts that net interest payments on debt will eclipse $1 trillion in fiscal year 2025, while climbing up to $1.7 trillion by 2034.

And debt held by the public is projected to rise from 99% of GDP in 2024 to 122% in 2034.

Karen Dynan, former chief economist at the U.S. Treasury and now professor at the Harvard Kennedy School, told CNN that if debt hits 150% or 180% of GDP, it would mean “very serious costs for the economy and society more broadly.”

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What this could mean for you

In a 2023 paper, Dynan contends that higher government debt — especially in comparison to borrowing by households and businesses — can drive up interest rates, making it more expensive to borrow and reducing future output and national income.

To make matters worse, investors could become disinclined to lend money to the government if they’re concerned the debt will not be repaid, increasing the risk of a fiscal crisis.

The International Monetary Fund warned in June that “chronic fiscal deficits” in the U.S. must be “urgently addressed.”

So, what does that really mean for whoever takes office after the November presidential election?

Dynan told CNN that taking action on this issue will require either tax hikes or cuts to benefits, such as Social Security and health insurance programs.

“Many [politicians] are not willing to talk about the hard choices that are going to need to be made,” Dynan said. “These are very serious decisions … and they could be very consequential for people’s lives.”