According to a recent report from the Heritage Foundation, interest on the federal debt is so gargantuan that it is swallowing 40 percent of all personal income taxes. That means 40 percent of all money derived from taxing US citizens’ incomes is spent directly on paying off interest on the national debt, rather than the debt itself.
As the author of the report, economist E.J. Antoni, writes in a different article, “If the spending is not cut soon, Argentina-style hyperinflation will follow as the only way to pay for excessive government spending.”
In his full report, Antoni explains that personal incomes taxes are the largest revenue source for the federal government. The fact that a growing portion of these taxes are being spent solely on servicing the debt is a sure indicator that America’s debt problem is close to becoming unmanageable.
"More than 40% of U.S. personal income taxes in America are consumed just in interest on the federal debt. If the spending is not cut soon, Argentina-style hyperinflation will follow as the only way to pay for excessive government spending…"
(w/ @profstonge – link in reply) pic.twitter.com/pC0jrotN0r
— E.J. Antoni, Ph.D. (@RealEJAntoni) December 6, 2023
The problem is getting worse on a daily basis, he explains, and will only result in a greater burden for American taxpayers if the current school of thought is followed to the end.
Over $500 billion was added to the national debt in October alone, a rate which Antoni refers to as “a breakneck pace” driven by the Biden administration. At this speed, we are on track to seeing 100 percent of personal income taxes spent on financing the debt, which is how one gets Argentinian levels of inflation. (By the same token, it is also how one could get a president like Javier Milei).
The US Treasury Department spent about $88.9 billion in October on interest for the federal debt, according to a recent Treasury statement from the Fiscal Service. The cost of servicing the debt was more than everything else on the government’s budget, including military spending, except two things: the Department of Health and Human Services, which oversees the Medicare and Medicaid entitlement programs ($89.8 billion), and the Social Security Administration, which oversees social security checks ($117.6 billion).
The federal debt is currently at $33.7 trillion, and now a fifth of all government revenue is spent just on paying off interest on the debt. “The problem is quickly spiraling out of control,” Antoni underscores.
If one looks at the whole of fiscal year 2023, net interest costs have hit $659 billion, or 2.5 percent of the national GDP, a $184 billion increase from the previous year.
This is according to the Committee for a Responsible Federal Budget (CRFB) which presented data from the Congressional Budget Office (CBO), Congress’ official think tank.
Turning back to Antoni, he argues that the only way to tackle this problem is to “cut government expenditures—and fast.” If Biden had “literally done nothing” after taking office and allowed COVID emergency spending to expire, government expenditures would have fallen to a point where the budget would now be balanced.
If future presidents and members of Congress do not curb spending, the only remaining option will be to dramatically raise taxes.