The latest budget projections show the national debt rising from $5.8 trillion last year to $7.6 trillion this year and $14.3 trillion in 2019. According to the Congressional Budget Office (CBO), the debt will rise from 40.8% of the gross domestic product in 2008 to 53.8% in 2009 and 67.8% in 2019.How close are we to having "too much debt?"
No one knows the point at which debt becomes unsustainable. According to an IMF report, the critical point is when a government is borrowing just to pay interest on the debt. According to the CBO, we will reach that point in 2019 when the federal government is expected to borrow $722 billion and its net interest expense will also be $722 billion.But that's not the worst of it.
Unfortunately, the debt will continue to rise past that point because entitlement programs such as Social Security and Medicare will be growing sharply as the population continues to age and more people qualify for such programs. . . .
In short, the fiscal situation going forward is even more precarious than it appears at first glance--and that's extremely bad. If I am right about Republican opposition to tax increases, default on the debt has to be considered as a real possibility.