SCOTT SIMON, HOST:
Interest rates are creeping up, making it more expensive for anybody trying to buy a home or carry a balance on their credit card. It's also making it more expensive for the U.S. government, which relies heavily on borrowed money to pay its bills. The balance on the government's credit card topped $39 trillion this month. NPR's Scott Horsley joins us. Scott, thanks so much for being with us.
SCOTT HORSLEY, BYLINE: Good to be with you.
SIMON: Even in Washington, D.C., $39 trillion sounds like a lot of money. How do those numbers add up?
HORSLEY: It is a lot of money. We actually crossed that threshold on St. Patrick's Day. So while members of Congress and the president were yukking it up, wearing green, the government was sliding deeper into the red. The basic problem is for every dollar the federal government brings in, it spends about $1.34. So it has to borrow to make up the difference, and those debts are piling up. We're less than halfway through the current fiscal year, and already the government's more than $1 trillion in the hole. And by the way, revenue from the president's tariffs was filling only a fraction of that hole even before a lot of those tariffs were struck down by the Supreme Court.
SIMON: How worrisome is this?
HORSLEY: You know, last year, the government spent $1.2 trillion just to cover the interest on that debt. Now, it's not an immediate crisis. There are still plenty of lenders willing to bankroll the government's borrowing, but those lenders are demanding higher interest rates now than they were a few years ago. And the combination of rising interest rates and that very big debt balance means it's costing the government more and more every year just to stay afloat. The government now spends more on interest payments than it does on Medicare or the military, or really anything else other than Social Security. And just like anyone who's weighed down with student loans or a giant mortgage payment, that means there's less money left over for everything else the government might want to do.
SIMON: And what are political leaders doing about the debt?
HORSLEY: Not much, for the most part, except adding to it. You know, Republicans used to talk about cutting spending to get the budget under control. Democrats used to talk about raising taxes. These days, neither party has very much to say about the debt. President Trump has ruled out cuts to programs like Social Security, and Democrats are reluctant to raise taxes except on the very wealthy.
Maya MacGuineas, who heads the Committee for a Responsible Federal Budget, told a Senate subcommittee this month the debt has ballooned over the last couple of decades because of lower taxes and higher spending. And she says members of both political parties have had a hand in that.
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MAYA MACGUINEAS: Nobody likes to raise taxes. Nobody likes to cut spending. We need to do both of them.
HORSLEY: When Congress does look at spending, it usually focuses on a very narrow slice of the federal budget, while the big-ticket items like Social Security are on autopilot - going up with inflation, going up because more baby boomers are retiring. And on top of that, you got those interest payments piling up.
SIMON: Is there a breaking point for the federal debt, Scott?
HORSLEY: There hasn't been a breaking point so far, despite some dire warnings in the past. And that's partly because lenders feel like, even with all this debt, the U.S. government is still the best and safest place to park their money. But, you know, that may not always be the case. Here's how Martha Gimbel of the Yale Budget Lab described it at that same hearing.
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MARTHA GIMBEL: The way that I sort of put it is we are currently the boyfriend at the beginning of the Hallmark movie in the big city, where the girlfriend is still going out with him even though she knows that it's wrong. But at some point...
UNIDENTIFIED PERSON: That's good.
GIMBEL: ...She's going to go home to the small town and find the nice firefighter and realize that there's another option.
HORSLEY: And we saw a little hint of that this week when the Treasury went out to borrow $69 billion and did not find a whole lot of takers. As a result, the government wound up having to pay a higher interest rate.
SIMON: Scott, while we still have you, it was announced this week that from now on, President Trump's signature is going to be on U.S. currency. Is that going to make bills more valuable?
HORSLEY: Well, they'll be worth more to Donald Trump. We know the president likes to put his name on things. And as you say, the Treasury announced this week that for the first time in history, a U.S. president's signature will be on the paper currency. Treasury Secretary Scott Bessent says that's to honor the 250th anniversary of the United States. And he added that under President Trump's leadership, we're on a path towards unprecedented economic growth and fiscal strength. Now, neither of those economic claims is true. And it's curious that Bessent would make those claims during this week, when gasoline prices are up, stock prices are down and consumers are feeling pretty gloomy.
SIMON: NPR's Scott Horsley. Thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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