Half-Trillion Dollar Interest Payments Coming in 2020

A recent NYT article explains some of the shocking statistics in the latest CBO report on projections of Uncle Sam’s debt service costs. I think most Americans are vaguely aware that the federal government has been spending money like there’s no tomorrow, but just take a look at these figures. This isn’t some far-off crisis; the outrageous numbers are going to hit SOON.

As the chart indicates, within a decade CBO projects that the annual interest expense on the federal debt will be more than $900 billion. But even if we just look at what it projects for 2020–a mere two years away–we see that the annual interest expense is expected to surpass $500 billion, i.e. HALF A TRILLION DOLLARS.

Folks, to be clear, these aren’t the figures for the deficit. These are the figures for the mere cost of servicing the existing debt. Even if the federal government starting in 2020 were to run a balanced budget forever, it would EVERY YEAR have to pay HALF A TRILLION DOLLARS just in servicing the existing debt (assuming Treasury yields remained constant from 2020 onward).

This trajectory is clearly not sustainable. American households and businesses need to start preparing (if they haven’t already) for a coming financial storm. Check out our video to consider some defensive strategies.