Interest on U.S. debt is becoming a top driver of future deficits, as the sheer size of past borrowing overwhelms the fiscal outlook | Fortune

"US sovereign debt has hit levels where interest expense is becoming a primary driver of the deficit. In a 'Fiscal Dominance' regime, the Fed's ability to aggressively hike rates to curb inflation is constrained, as doing so risks a fiscal or financial crisis."

"Interest payments alone are headed for $1 trillion this fiscal year, with projections indicating they will soar to $2.1 trillion by 2036, when publicly held debt is expected to balloon to 120% of GDP."

"The gap between primary and total deficits has historically been narrow, but it started to grow as spending on Social Security and Medicare increases with the aging baby boomer population."

U.S. debt has surpassed the economy, with a debt-to-GDP ratio of 100.2%. Interest payments on past borrowing are becoming a primary driver of the deficit. Federal budget deficits are projected to exceed $2 trillion this fiscal year, with interest costs expected to reach $2.1 trillion by 2036. The Congressional Budget Office anticipates that the primary deficit will remain stable at about 2% of GDP, while total deficits will widen to nearly 10% by the mid-2050s due to rising interest payments and increased spending on Social Security and Medicare.

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