With the national debt poised to pass the historic $1 trillion level any day now--the debt total stood at $998.743 billion at the close of business Oct. 15--government budgeteers are noting that another landmark is also in the offing: the government's annual interest payment on its debt will top $100 billion for the first time this fiscal year.
The government's borrowings range from 40-year-old World War II bonds earning interest at 8.5 percent to some recent securities with interest almost twice as high. The interest rate averages out to just over 10 percent; with a 13-digit national debt, that means a 12-digit interest payment.
Interest on the debt is now the third-largest category in the budget--behind benefit payments (such as Social Security) and national defense.
The Office of Management and Budget's estimates show that the government will pay out more money in interest in the first six months of this fiscal year than it will spend all year long on space, energy, environment, housing and transportation programs combined.
Economists who study the "distributive" effect of federal spending note that the impact of these big payouts is that government is taking money from middle-class individuals through the income tax--the largest single source of government revenues--and passing it on to banks, insurance companies and wealthy individual bondholders.