The National Debt Is Raising Borrowing Costs for Everyone

The United States national debt is increasing borrowing costs for consumers and businesses, according to a March 13, 2024, analysis by the Congressional Budget Office (CBO). The CBO projects that interest payments on the national debt will reach $870 billion in fiscal year 2024, a 36% increase from the $639 billion paid in fiscal year 2023. This rise in interest payments is attributed to higher interest rates and a growing debt burden, which is expected to exceed $34 trillion by the end of fiscal year 2024. The increased cost of government borrowing is spilling over into the private sector, leading to higher interest rates on mortgages, auto loans, and credit cards. For instance, the average interest rate on a 30-year fixed-rate mortgage has risen from approximately 6.5% in early 2023 to over 7.0% in early 2024, directly impacting housing affordability. Similarly, auto loan rates have seen an increase of about 0.5 percentage points over the same period. The CBO report highlights that this trend is not isolated to the current fiscal year, projecting that interest payments will continue to climb, potentially exceeding $1.6 trillion annually by 2034 if current fiscal policies remain unchanged. This sustained increase in borrowing costs could dampen economic growth by discouraging investment and consumer spending.