Story by Jing Pan • 22h • 3 min read
Rising national debt has long been a pressing issue in America, and it has caught the attention of Tesla CEO Elon Musk.
“America is going bankrupt btw,” Musk wrote in a recent post on the social media platform X. He was responding to a post by Billy Markus, the creator of Dogecoin.
Markus’ post included a screenshot of a headline reading, “Interest Payments on US National Debt Will Shatter $1,140,000,000,000 This Year – Eating 76% of All Income Taxes Collected: Report.”
He added a comment expressing his dismay: “I am glad 76% of the income tax I pay goes directly to important things like interest on past government incompetence.”
But just how severe is the financial situation? Let’s take a closer look at the numbers.
‘Do they even care?’
The headline originated from an article on The Daily Hodl, which featured an analysis by economist E.J. Antoni.
Antoni, a research fellow in the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, delved into the latest Monthly Treasury Statement from the Bureau of the Fiscal Service.
He pointed out a striking detail: in June 2024, the U.S. government spent $140.238 billion on interest for Treasury debt securities. For context, the government collected $184.910 billion in individual income taxes that same month.
This means that an amount equivalent to 76% of June’s individual income tax revenue was used solely for interest payments on the national debt, not including principal repayment.
Antoni expressed his concern about America’s fiscal challenge in a post on X, writing, “Interest on the federal debt was equal to 76% of all personal income taxes collected in June – that’s the Treasury’s largest source of revenue and three-quarters of it gets consumed just by interest; does Congress know? Do they even care?”
‘Be prepared’
The reality is, while the U.S. has long boasted a strong and expanding economy, its national debt has also been rising — at an alarming pace.
To illustrate, U.S. federal government debt stood at $5.77 trillion at the start of 2000, more than doubled to $12.77 trillion by the beginning of 2010, and escalated to $23.22 trillion at the start of 2020.
The most recent increase has been particularly startling, with the national debt reaching $34.94 trillion, per the latest figures from the Treasury Department.
This escalation in debt has led to rising interest payments, exacerbated by the Federal Reserve’s substantial interest rate hikes since March 2022. Consequently, interest costs are mounting.
For the current fiscal year, the Treasury Department expects interest payments on treasury debt securities to total $1.14 trillion.
While the projected number is substantial, Antoni remains skeptical. He suspects that the fiscal challenges could be even greater, remarking, “If that estimate is anything like their usual overly optimistic projections, then be prepared for it to be much higher.”