Part 4/8:
A notable factor influencing the national debt situation is the rise in interest rates, which have surged from between 0.5% and 4.5% in recent years. The average interest rate for US debt, which was just 1.772% in 2020, has increased to 3.282%. This marked increase significantly elevates the cost of servicing the debt. To illustrate, a million-dollar mortgage that initially cost $17,720 annually in interest could now cost $32,820.
The Feedback Loop of Debt
The increase in interest payments exacerbates the deficit as necessity forces the US to borrow more. The cycle is detrimental; as interest payments consume a growing portion of the federal budget, they contribute to a widening deficit.