Trillion dollar debt costs in our future
We've already noted the dire news about federal deficits and the national debt. But buried in that ocean of red ink are the stunning figures on the interest payments future American taxpayers will have to make on the debt we run up today:
Interest payments will rise from $325 billion last year to $928 billion by 2029, a nearly threefold increase. If tax cuts and spending increases are extended, interest will exceed $1 trillion and set a new record as a share of the economy.
The federal government will spend more on interest than on Medicaid or children by 2020. By 2024, interest will match defense spending.
If interest rates rise 1 point higher than projected, it will cost an extra $1.9 trillion over ten years.
Under current law, net interest payments will nearly triple over the next decade, rising from $325 billion last year to $928 billion by 2029. Under the Alternative Fiscal Scenario, which assumes lawmakers extend the tax cuts and spending increases passed over the last two years, interest on the debt will exceed $1 trillion in a decade.
That's how dangerous the current spending binge has become. As we have noted time and time again, federal spending is a bipartisan problem -- neither party has shown the sustained will to curb spending, even modestly.
Eventually, the credit cards are maxed out, and the printing presses run out of ink. And the numbers noted above? That's a best case scenario:
...the situation could end up being far worse than current projections indicate. CBO expects the interest rate on ten-year bonds to remain below 3.8 percent, significantly below the 6 percent average over the two decades prior to the Great Recession.
If interest rates ended up 1 percent higher than projected, CBO estimates interest costs would increase by $1.9 trillion over the next decade, reaching more than $1.2 trillion in 2029 alone and pushing debt to 99 percent of GDP. Under the Alternative Fiscal Scenario, we estimate interest costs would increase by about $2.4 trillion over a decade to $1.4 trillion in 2029 alone and push debt to 112 percent of GDP.
The United States isn't on par with Greece just yet. But we seem intent on trying to be.