We must control debt, which costs us $1 trillion a year

Well, that didn’t take as long as expected. In case you missed it, our federal government is now estimated to pay more than $1 trillion a year to service just the interest on our national debt — about $200 billion more than we spend on our military or Medicare.

Why are we suddenly paying so much? Because the cost to service our debt has doubled in the past 19 months as annual federal deficits balloon and high-interest rates make borrowing more expensive.

The origin of this “sudden” problem dates back to the early months of the COVID pandemic when government lockdowns devastated the economy. Initially, there was broad bipartisan support to borrow and spend huge amounts of federal money to stimulate the economy — forgoing any concerns that it might harm the economy over the long term. In 2020 President Trump signed off on about $3 trillion in COVID relief spending and a year later President Biden signed on for a few trillion more.

No small number of critics, including former Democratic Treasury secretary Larry Summers, reported in the New York Times, suggested that enough was enough and that the Biden boost would overheat the economy. Other financial experts told us not to worry about higher inflation coming to get us all or said if it did come it would be temporary — “transitory” was the word they liked to use.

But that optimistic prediction didn’t work out so well. Although the Federal Reserve’s goal is to keep inflation at about 2% each year, inflation shot up to 7% in 2021, 6.5% in 2022 and about 3.7% this year, according to the U.S. Inflation Calculator.

To accomplish lower inflation rates, the Fed had to raise interest rates 11 times in the last few years — which has caused a serious pain in the wallet for everyone who needs a mortgage or a new car. In 2020 the average home buyer could get a 3% mortgage. Now the average 30-year-fixed rate runs about 8%. That means the cost to finance a $300,000 house with a 30-year term increased about $1,000 per month.

The same pain has extended to our federal budget. A few years ago, the cost to service the federal debt was “only” about $400 billion for the year, but growing interest rates — and higher yields on government bonds to get people to buy our debt — have suddenly doubled our debt-service costs. What’s worse is that as the people in charge in Washington continue to spend loosely and borrow recklessly, interest rates will get even worse.

According to the USDebtClock.org, the federal debt is fast approaching $34 trillion. USDebtClock says we’ve spent about $6.2 trillion the past year, with government receipts at about $4 trillion. That means we need to borrow about $2 trillion to make up the difference. And remember that half of that shortfall is just the cost of servicing current debt.

It’s no wonder that the last of the big three credit rating agencies, Moody’s, is warning it may yank the AAA rating it has given the U.S. since 1917 — just as Standard and Poor’s did in 2011 and Fitch did last year. As CNN reports, a downgrade by Moody’s — caused by our representatives’ chronic inability to work out a realistic and sustainable federal spending path — will drive our borrowing costs all the higher. I’m no financial expert, but if we don’t unite as a country and clean up our fiscal mess, spending $1 trillion plus for debt service will soon be considered a bargain.