Interest Payments

 

Source:  CBO baseline projections, June 2017

Explanation:  This chart displays projected Federal net interest payments for each year through 2027, in billions of dollars.  There is considerable disagreement about what level of federal debt, as a percent of the economy, is sustainable. Some economists believe that debt in excess of 60% or 70% is dangerous; others believe sustainable levels are higher or lower.  However, there is broad agreement that we need to avoid a fiscal “death spiral” where annual interest payments become so large that the Treasury is borrowing enormous sums of money simply to pay interest on the existing debt — and that borrowing deepens the debt even further, requiring even more borrowing to pay ever-larger interest payments. As the above chart displays, the current level of debt held by the public — 77% of GDP — already has annual interest payments on a very steep incline. By 2027, current policies will generate annual interest payments exceeding $750 billion, on a public debt that reaches 89% of GDP.