All opinions expressed in this article are solely the opinions of the contributors.
Economist Paul Krugman recently said that interest payments on U.S. debt won’t be a major concern in the years ahead. The U.S. national debt is almost at $33 trillion, and the interest payments alone on that debt are approaching $500 billion per year.
Straight Arrow News contributor Larry Lindsey disagrees with Krugman and instead urges Americans to consider just how serious of a concern the national debt might become. Lindsey uses recent data and observations to project alarming scenarios that demand our attention.
Well, even Nobel Prize winners can be wrong.
Consider the Congressional Budget Office, which has a very cautious estimate of what’s going to happen in the future…has the interest payments on the debt rising from $663 billion now to $1,440,000,000,000 in 2032. That’s an increase of 117%. Meanwhile, GDP over that period is only going to grow about 50%.
So interest payments on the debt are going to grow twice as fast as the economy. And it doesn’t take any mathematical sophistication to know that growing something twice as fast as the economy is not a way that’s sustainable.
Now, CBO has a very low interest rate assumption. If we were to take just current interest rates, in other words, that they won’t fall or rise, interest instead will rise to $2,290,000,000,000, or 59% higher than what CBO says, and three and a half times what it is today. That will take it up to 5.7% of GDP.
And by 2043, 10 years later, the interest on the debt is going to consume 8% of GDP, which is three and a half times as much as now.
