Over the past three years, the amount of interest the U.S. government has to pay on the national debt has become the fastest-growing category of government spending. It was already the second-largest government expenditure in 2024 and will soon become the largest.
The Committee for a Responsible Federal Budget (CRFB) estimates that the growing burden of the interest paid on the national debt will account for 21% of the total expected growth in government spending over the next ten years.
The cost of paying interest on the national debt is not the only contributor to the growth of future government spending. The CFRB also projects that Medicare and other healthcare spending will account for 35% of the increase in the U.S. government’s spending growth. Social Security will account for another 28% of the anticipated increase. “Everything else” accounts for 16% of the projected government spending growth.
A public health problem
The very rapid growth of how much the U.S. government pays to borrow money to support its spending imposes more than a fiscal burden on Americans. It threatens their health.
In a recent article, the American Council on Science and Health’s Alex Berezow makes that argument, calling the U.S. national debt a “public health threat.” Here’s the crux of how he arrived at that position:
Though the national debt feels like an abstract academic concept, it isn’t. The debt itself can wreak economic havoc, a phenomenon known as “crowding out.” When the government needs to borrow money, it often gets that money from investors (in the form of government bonds like 10-year Treasury notes). But investor money is not unlimited. Other entities, like established businesses and startups, also need investor money. Competition for this money drives up the cost of borrowing that money—the interest rate. So, the more the government borrows, the higher the interest rate for everyone.
Simultaneously, every dollar invested in government debt is a dollar that cannot be invested elsewhere. That means businesses that need to borrow substantial amounts of money to finance major projects like expansion or research cannot do so because the borrowing costs are too high.
And that is precisely why the national debt is a public health threat. Biotech companies and the venture capitalists who invest in them are having difficulty raising money, and layoffs are plaguing the industry. Even large pharmaceutical companies, which many assume are swimming in cash, are cutting back. Bristol Myers Squibb is set to lay off about 6% of its workforce, some 2200 people.
To be sure, the national debt affects all industries, and the troubles facing the biotech and pharma industries cannot solely or even largely be blamed on the national debt. It is simply one factor among many. But it is a factor that the government can control—but chooses not to.
Over the next decade, 84% of the growth in federal government spending will be due to healthcare, Social Security, and interest payments. Without serious reform, the government will need to borrow yet more money to pay for these increased costs, exacerbating the aforementioned issues. Combined, this threatens to underfund basic services like Medicare as well as health innovation in America. Money problems inevitably lead to health problems.
A more direct way that burden will be imposed is through cuts to big government health care programs, like Medicare Advantage. The Biden administration is pushing through cuts to the popular program’s benefits that half of American seniors use for their health care. Those Americans will now face higher out-of-pocket costs because the government can’t afford to pay both public health benefits and the interest it owes to its creditors.
It’s important to recognize that politicians and bureaucrats have absolute control over how much money the U.S. government spends. Politicians are responsible for approving excessive spending that adds to the national debt. Bureaucrats are responsible for managing that spending, and their failure to do so prudently adds to the burden of the national debt.
Since the government can’t skip paying its creditors without defaulting on the national debt, more cuts to public health programs can be expected. What the Biden administration is doing with its cuts to Medicare is just the beginning.
- This article was published by the Beacon