In spite of recent efforts by the Obama administration and Congress, recent publications from the U.S. Treasury Department forecast a grim possibility: that within a decade, interest payments on American governmental debt will exceed $750 billion per year.
Zero Hedge, an independent finance blog, reported on the Treasury data on February 6. According to the figures, the two major drivers of federal spending were the Department of Health and Human Services and the Social Security Administration, which for the first quarter of 2013 are expected to spend approximately $225 billion and $205 billion, respectively. These costs dwarfed the defense budget for that period, which could hit roughly $160 billion.
The Treasury’s website features up-to-date information on current and past interest expenditures. Annual outlays exceeding $300 billion first occurred in 1995, when those costs jumped from $296 billion to $332 billion in one year’s time. Since then, the numbers have fluctuated, reaching a record high in 2011 when $454 billion was spent on interest payments. Last year, the federal government paid out $359 billion.
How unsustainable is the situation? The forecasts released by the Office of Management and Budget, the executive branch’s primary financial research unit, are based on current fiscal policies that are subject to change. Adjustments in the U.S. government’s debt credit ratings could force these interest rates higher, though it’s unclear when such an action (or actions) would take place.
The federal interest forecasts suggest that a high level of uncertainty remains in the U.S. economy. As such, investors need to stay informed about these issues in order to effectively manage their portfolios and profit in a low-growth environment. Stay with GreatWealthStrategies.com for methods of wealth preservation that can help you succeed in this volatile investment climate.