Evan Lorenz on rising interest expense for the U.S. government

According to the White House's Office of Management and Budget, the United States paid an average of 1.5% on its obligations in the fiscal year ended Sept. 30, down from 1.6% in 2021 and 2.1% in 2012.  If we were to mark the $24.4 trillion of public debt outstanding to a 4% yield, interest expense would soar to $975.5 billion from the $357.1 billion paid last year.  The difference between those two figures - $618.3 billion - is not so far from the $779.7 billion defense budget.

Thankfully for Uncle Sam, interest rates do not reset overnight (and for that matter, too, they sometimes go down).  As of June 30, the average maturity on marketable Treasurys was 74.3 months, with 49% of debt maturing in three years or more.

~ Evan Lorenz, "Twisting in the wind," Grant's Interest Rate Observer, November 11, 2022