America—Five Years Away From a Debt Death Spiral

Soon every new dollar the U.S. government borrows from outside investors will be needed to pay net interest on its national debt.

One of the wisest kings who ever lived was inspired to write, “The rich rules over the poor, and the borrower is servant to the lender.” The United States is about to learn this lesson the hard way. The federal government has borrowed almost $6 trillion from its Social Security Trust Fund (intragovernmental debt) and over $16 trillion from outside investors (public debt). Last year, it paid an astounding $324.7 billion in interest payments on its debt—roughly half of what it spends on defense. Data from the U.S. Treasury Department’s Office of Debt Management show that the government is only five years away from the point where every new dollar it borrows from outside investors will have to go toward funding interest payments on the national debt.