YORK (CNNMoney.com) -- Here's a new way to think about the U.S.
government's epic borrowing: More than half of the $9 trillion in debt
that Uncle Sam is expected to build up over the next decade will be
More than half. In fact, $4.8 trillion.
If that's hard to grasp, here's another way to look at why that's a problem.
2015 alone, the estimated interest due - $533 billion - is equal to a
third of the federal income taxes expected to be paid that year, said
Charles Konigsberg, chief budget counsel of the Concord Coalition, a
deficit watchdog group.
On the bright side - such as it is - the
record levels of debt issued lately have paid for stimulus and other
rescue programs that prevented the economy from falling off a cliff.
And the money was borrowed at very low rates.
But accumulating any more interest on what the United States owes at this point is like extreme sport: dangerous.
the more so because interest rates will rise when private sector
borrowers return to the debt market and compete with the government for
capital. At that point, the country's interest payments could jack up
"When interest rates rise even a small amount, the
interest payments go up a lot because of the size of the debt,"
The Congressional Budget Office, which made the
$4.8 trillion forecast, already baked some increase in rates into the
cake. But there is always a chance those estimates may prove too
And then it's Vicious Circle 101 - well known to anyone who has gotten too into hock with Visa and MasterCard.
country depends heavily on borrowing to fund what it wants to do. But
the more debt it racks up, the more likely it becomes that creditors
could demand a higher interest rate for making new loans to the
Higher rates in turn make it harder to pay off the
underlying debt because more and more money is going to pay off
interest - money, by the way, which is also borrowed.
And as more
money goes to interest, creditors may become concerned that the country
can't pay down its principal and lawmakers will have less to fund all
the things government is supposed to do.
"[P]olicymakers would be
less able to pay for other national spending priorities and would have
less flexibility to deal with unexpected developments (such as a war or
recession). Moreover, rising interest costs would make the economy more
vulnerable to a meltdown in financial markets," the CBO wrote in its
most recent long-term budget outlook.
So far, that crisis of confidence hasn't happened. And no one can predict with any certainty whether or when it could occur.
But should it occur, the change could be abrupt.
That's because the government frequently rolls over - or refinances - the debt it has issued as it comes due.
other words, when a Treasury bond or note matures, the government must
pay the investor the face value on that debt. In order to do that, the
Treasury borrows money to pay back the investor, which means the debt
would be refinanced at whatever the going interest rates are at the
Just how much churn is there? Of late, a fair bit it seems.
A Treasury borrowing advisory committee reported in early November that
"approximately 40 percent of the debt will need to be refinanced in
less than one year."
Since rates may well stay low over the next
year, it's possible that debt could be refinanced at the same or even
lower rates. But that situation won't last forever.
help mitigate the potential risk of rising rates, the Treasury has said
it would start increasing the average maturity of the new debt it
issues. That way the debt it refinances in the next couple of years
will be locked in at lower rates for longer periods of time.
the Obama administration has promised to produce a deficit-reduction
plan that would aim to bring down annual deficits to roughly 3% of GDP
over the next several years, below the 4% to 5% currently projected.
that happens, the $4.8 trillion in interest payments that CBO estimates
for the next decade could go down if interest rates don't increase as
much as CBO expects.
"There will be less debt outstanding than if
we don't get the deficit down. It may also reduce [the average interest
rate on the debt] since less debt means less pressure on interest
rates," said William Gale, co-director of the Tax Policy Center.
whether they can do that within a few years of an economic recovery is
another matter. "Even under the president's  budget as evaluated
by the CBO we do not get anywhere close to that," Gale said.
could mean the president's 2011 budget proposals would have to make a
lot of changes to get closer to the 3% goal. Unpopular changes like tax
hikes and spending cuts.
Budget hawks hope the president will push for a deficit-reduction commission
to come up with ways to cut the deficit and then propose legislation
that lawmakers would only be able to vote for or against. The reason:
There is no political will to make the tough calls. Especially in a
mid-term election year.
Travel Brigade visits the town of Engelberg, Switzerland and heads 10,000 feet up to the top of Mount Titlis
Peter, travel editor for CBS News talks to the Guards Museum Historian, Andrew Wallis on everything from the guards to the Royals.
Tech guru Rich DeMuro introduces us to the new Google Camera App and all of its best features.
Jessie Jane Duff (USMC - Ret.) of Concerned Veterans for America joins GOP Brooklyn to discuss veterans and their challenges.
Jean Carne drops by to talk about us about her amazing career and her newest projects.
Verses and Flow welcomes Bridget Kelly, RaVaughn, and poets Dasan Ahanu, Imani Cezanne and Se7en the Poet.
Halli welcomes philosopher and transhumanist, author, entrepreneur, and former National Geographic and New York Times correspondent Zoltan Istvan.
The Jazzy Vegetarian welcomes extraordinary vegan chef to the stars Alan Roettinger to talk about his passion for bringing health and pleasure together in a wide range of dishes.
Bob Nelson a screenwriter and 2014 nominee for an Academy Award for writing Nebraska, which was directed by Alexander Payne joins NorthWest Prime.
Anna discusses the market for digital products in Brazil, she is an entrepreneur, digital strategist, and founder of Migux, Brazil's largest online network for children with over 3M users
Caleb Barlow talks with experts from Vormetric to explore if it is possible to use the tried and true SIEM and anomaly detection techniques with file system level log information.
Christine Francis Poe talks about her experiences with her son, Dorian, and his magical polar bear who is making a difference in the mission to raise awareness for Autism.
The Fantasy Baseball Roundtable is back, join the guys for laughs and expert advice on this years fantasy baseball season.
Comedian Andrew Schulz dishes on his shows Guy Code, along with Girl Code, and Guy Court all on MTV2.
Mark Kohler celebrates his 400th show with best selling Author Sharon Lechter as they discuss financial literacy.
Joey Molland, the guitarist and sole surviving member of the British power-pop band Badfinger joins Rundgren Radio.
Eddie Huang and co-host Elena Bergeron talk NBA success and they're joined by MFN eXquire to preview the playoffs.
Ann recaps The Masters and talks about baseball's new instant replay & 'no collisions at home plate rule' with former MLB ump Al Clark.
On his show, Comedian Rodney Perry covers arts and entertainment, everything from comedy and politics to music and acting, with his signature comedic slant.
Joy Keys provides her listeners with insight to improve their lives mentally, physically, monetarily and emotionally. Past guests on the show have included Meshell Nedegeocello, Blair Underwood, in addition to an impressive list of CEOs, humanitarians and authors.
Host Barry Moltz gets small businesses unstuck. He has founded and run small businesses with a great deal of success and failure for more than 15 years. This is a business radio show where he shares all the craziness of small business. It’s that craziness that actually makes it exciting, interesting and totally unpredictable.
The Bottom Line Sports Show is hosted by former NBA stars Penny Hardaway, Charles Oakley, Mateen Cleaves. Tune in to get the inside scoop on what's happening in sports today.
Hits Radio covers basketball, sports culture and entertainment with past guests including Jason Kidd, Robin Lundberg and Chris Herren.
Listeners get an earful on The Halli Casser-Jayne Show, Talk Radio for Fine Minds. Whether it’s the current political cocktail or the latest must-read award-winning book, Halli tackles all topics and likes to stir — and sometimes shakes — things up.
Official Internet radio show of forthcoming epic paranormal investigation book by Eric Olsen and "Haunted Housewife" Theresa Argie.
Award-winning World Footprints is a leading voice in socially responsible travel and lifestyle. Hosts Ian & Tonya celebrate culture and heritage and bring a unique voice to the world of travel.
Football Reporters Online is a group of veteran football experts in the fields of coaching, scouting, talent evaluation, and writing/broadcasting/media placement. Combined, the group brings well over 100 years of expertise in sports.
Host John Martin interviews the nation's leading entrepreneurs and small biz experts to educate small business owners on how to be successful. Past guests have included Emeril Lagasse and Guy Kawasaki.
Sylvia Global presents global conversations pertaining to women, wealth, business, faith and philanthropy. Sylvia has interviewed an eclectic mix from CEOs and musicians to fashion designers and philanthropists including Randolph Duke and Ne-Yo.
It's good to talk.