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Interest on the Debt
About This Indicator
What Is Interest on the Debt?
What the federal government pays in interest, in billions of dollars at an annual rate, from the Bureau of Economic Analysis, quarterly since 1947 and estimated back to 1929. BEA also counts the interest that builds up on federal employee pensions, so this runs above the Treasury's net interest figure. Most of the jump into 1960 is a definition change, not borrowing.
Why Does It Matter?
Interest buys no roads, planes, or benefits: it is the cost of past borrowing, set by how much was borrowed and at what rate, not by any vote. It is also income to pension funds, banks, and savers holding Treasury bonds.
Can Politics Influence It?
Past deficits set the size of the debt; the Federal Reserve and bond market set the rate. Because debt takes years to roll over, rates locked in during one term shape the next term's bill.
Key Idea
The bill is the debt times the rate. From 2008 to 2016 the debt roughly doubled while interest rose less than a fifth, because rates fell. When rates climb, the arithmetic reverses.
Not Scored
Source: BEA. NIPA Table 3.2 (A091RC).
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