There's Only One Way to Stem the Rising Cost of U.S. Debt
No matter how much Congress and President Clinton can agree to trim the federal budget deficit, as long as there is a deficit of any size, the national debt will continue to mount. With the administration projecting that the budget deficit will fall little between now and 2000, the resulting steady rise in the debt means that interest payments will continue to climb and pass the $300 billion mark at the end of the decade.</br></br>Interest on the debt is becoming increasingly costly. Last year's federal budget deficit would have been a scant $200 million were it not for the $203 billion the government had to pay the public in interest.</br></br>By 1997, the interest payments -- which are partially offset by interest received from the public and by interest received by government trust funds, such as those for Social Security and civil service retirees -- will be greater than defense spending. At that point, only Social Security payments will claim a greater chunk of the budget than net interest payments.</br></br>The chart at the right shows the strong link between the cost of financing the debt accumulated from past deficits and the annual amount of red ink in succeeding years.</br></br>Obviously, many other factors have been at work, with the deficit exceeding net interest payments in all but two of the fiscal years from 1975 to 1994. However, the message of the chart is clear: The budget gap the new congressional Republican majority has vowed to close is perhaps not so much a matter of overspending today as of the decisions of past Congresses and presidents, both Republicans and Democrats, to borrow rather than balance budgets.