Soaring Interest Costs on Federal Debt Raise Concerns of Crowding Out Other Spending

America's interest payments on debt totaled $660bn in 2023 fiscal year, up from $475bn the previous year.

CBO estimates interest costs could reach $1trn, or 3.1% of GDP, by 2028 - more than defense spending.

Federal deficit ballooned to $2trn in 2022 fiscal year, up from $900bn the previous year.

If interest rates and deficits don't come down, debt servicing costs could crowd out other spending.

Equity investors see higher long-term rates as positive sign for economy, meaning less Fed tightening may be needed.