A few days ago, ZeroHedge highlighted something amazing: That, for the first, time, we’re paying $500 billion – half a trillion dollars – in interest on the federal debt.
In 2015, Federal revenues amounted to approximately $3.2 trillion dollars. That means that just over 15% of the government’s income goes to servicing debt – that one dollar out of every $6.40 taken in goes to debt payments.
From this point on, that’s as good as it’s going to get. That number will increase as interest rates go higher and as we continue to deficit spend.
And that number guarantees that our deficit spending will increase. Those interest payments are crowding out the money available for our increasing government obligations, with healthcare costs rising and social programs increasing (those retiring Boomers are going to need more and more).
When does it break? When it hits 25% of revenues? 50%? When it pushes the annual deficit past $2 trillion?
I don’t know what the metric will be – but we’re already unsustainable, and at some point we’re going to get called on it.