Cost of Interest on National Debt Falls Despite Surging Deficit: CBO – By Michael Rainey (The Fiscal Times) / Oct 9 2020
The federal government estimates that it has paid billions of dollars less in interest on the national debt in the 2020 fiscal year, despite an increase in the size of the national debt on an annual basis.
“Net outlays for interest on the public debt decreased by $46 billion compared with the same period in 2019,” the Congressional Budget Office said in its latest monthly budget review, released Thursday. The reason for the decrease? “[L]ower interest rates and lower inflation more than offset the effects of a larger federal debt.” (H/t to former Council of Economic Advisers head Jason Furman for noticing this detail; we’ve replicated his marked-up chart from the CBO report below.)
The Wall Street Journal’s Kate Davidson also noted the reduction in outlays on interest: “Lower interest rates reduced the cost of servicing the debt in fiscal 2020, giving policy makers more capacity to finance the recovery effort. The yield on the 10-year Treasury note was 0.779% late Thursday, down from 1.732% a year ago.”
Continue to article: https://www.thefiscaltimes.com/2020/10/09/Cost-Interest-National-Debt-Falls-Despite-Surging-Deficit-CBO
