It is hard to comprehend the size of the $28 trillion US economy and $6 trillion US Federal budget. One approach to help wrap your head around these huge numbers is to use ratios in historical context. This approach is used to examine the large increase in US Federal Government debt since the financial crisis of 2008 and in Federal interest outlays (i.e. spending) since 2020 (see Figure 1). Ratios reveal the increases are not nearly as dramatic as Figure 1 implies, but the ratios of Federal interest payments to Federal spending and gross domestic product (GDP) have increased enough to be at levels that have not been sustained historically. Debate is likely to intensify over what is the appropriate share of current government spending to devote to interest paid on past government spending. The debate will focus on interest rate decisions of the Federal Reserve and on how, and by how much to, reduce Federal deficits. The likelihood of this debate intensifying will encourage forward progress on the farm bill as it raises the potential for future cuts in farm safety net spending.
