National debt: A pop quiz

By Rich Barbieri, deputy managing editor


NEW YORK (CNNMoney) -- Pop quiz: What's the fastest-growing portion of the federal budget this year?

There are a number of good candidates. Maybe it's Social Security. We know the baby boomers are retiring. Is it defense? The Pentagon is fighting wars in Afghanistan and Iraq, after all.

Maybe it's the ongoing cost of those bailouts that Congress passed more than two years ago.

OK, suspense over. It's the interest on the national debt, according to the Congressional Budget Office.

Every month, CBO prepares a two-page balance sheet that summarizes what the government is spending and taking in. The latest version, released Monday, reports that Uncle Sam has paid $80 billion in net interest on the federal debt through the first four months of the 2011 fiscal year.

That represents a 9.1% increase over the same period last year.

The four-month period offers just a snapshot of the year. And the CBO report distills the gigantic federal budget, with its thousands of different programs, into nine big categories.

But make no mistake: The interest on the debt is a growing chunk of the budget. Last fiscal year, interest costs rose 13.2% -- more than any other category.

CBO, in its typically understated fashion, chalks up the current year's increase to "the substantial growth in the national debt over the past year."

The debt total recently hit the $14 trillion mark. And over the next 10 years, the CBO projects that interest costs will skyrocket because of anticipated higher rates and the issuance of new debt.

The government has been forced to borrow a lot because of the persistently wide gap between spending and revenue.

This week alone, the Treasury Department plans to issue $191 billion in debt to investors at home and abroad. And in fiscal 2011, the federal government is expected to have its third consecutive annual deficit exceeding $1 trillion. To top of page

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