But, according to the Congressional Budget Office, annual debt payments — currently about $200 billion — are set to skyrocket. CBO estimates that interest payments on the federal debt will total $916 billion by the year 2020.”Interest rates are going to rise and at the same time, were going to have a substantial increase in the size of the debt,” says Roberton Williams, a senior fellow with the Urban-Brookings Tax Policy Center. “Well be paying five times as much in dollar terms by 2020 than we did last year.”
How Big A Number?How much is $916 billion? Its more than we currently spend on Social Security. And it will represent 18 percent of federal spending in 2020 — nearly as large a share as defense spending.
Having to pay close to $1 trillion a year just on debt will necessarily crowd out other parts of the federal budget. Roads, parks, education — pick any priority you like, theyll all come under pressure.”In 20 years, if you look at combined debt service, Social Security and health care, those are going to cost us more than the current tax system is capable of raising,” says David Wyss, chief economist for Standard & Poors.