Fact check true: For the first time in history spending on interest will exceed spending on defense.
Do We Spend More On Interest Than Defense?
The Committee for a Responsible Federal budget did a Fact Check on that question. The answer is yes.
During a recent town hall, former United Nations Ambassador and current Presidential candidate Nikki Haley claimed, “for the first time we’re paying more in interest payments than we are on our defense budget.”
This statement is true. According to the Congressional Budget Office’s latest baseline, in Fiscal Year (FY) 2024, spending on interest is projected to total $870 billion, while spending on national defense will total $822 billion. This has never been the case before, going back to at least 1940.
Net interest spending nearly doubled from FY 2020 to 2023, rising from $345 billion to $659 billion. As a share of the economy, interest grew from 1.6 percent of GDP in 2020 to 2.4 percent in 2023. This year, interest is projected to rise to 3.1 percent of GDP and will exceed its record – 3.2 percent set in 1991 – in 2025.
In addition to breaching defense spending, interest costs are expected to exceed Medicare spending this year, making interest on the national debt the second largest line item in the FY 2024 federal budget, behind only Social Security.