The US Is 5 Years Away from a National Debt Death Spiral. Here's Why Net interest on the national debt has become one of the fastest growing segments of federal spending


Will the world end per the NY princess in 12 years or will the US collapse first. So many things to ponder.

According to the U.S. Treasury Department’s Office of Debt Management, the U.S. government is just five years away from the point where every new dollar it borrows from the public will go toward funding interest payments on the national debt.

Negative Borrowing Deficit

That is the main takeaway from the Debt Management Office’s Fiscal Year 2019 Q1 Report, which featured the Office of Management and Budget’s latest projection of the U.S. government’s borrowing from the public, shown in the chart below:

ZeroHedge explains the significance of what the chart shows as the Primary Deficit, indicated as the blue portion of the bars in the chart, swings from positive to negative beginning in 2024:

As part of today’s Treasury Presentation to the Treasury Borrowing Advisory Committee, there is a chart showing the Office Of Debt Management’s forecast for annual US debt issuance, broken down between its three component uses of funds: Primary Deficit, Net Interest Expense, and “Other.”

That chart is troubling because while in 2019 and 2020 surging US interest expense is roughly matched by the other deficit components in the US budget, these gradually taper off by 2024, and in fact in 2025 become a source of budget surplus (we won’t be holding our breath). But what is the real red flag is that starting in 2024, when the primary deficit drops to zero according to the latest projections, all US debt issuance will be used to fund the US net interest expense, which depending on the prevailing interest rate between now and then will be anywhere between $700 billion and $1.2 trillion or more.

In short: in the stylized cycle of the US “Minsky Moment”, the US will enter the penultimate, Ponzi Finance, phase – the one in which all the new debt issuance is used to fund only interest on the debt – some time around in 2024.

Fiscally Unhealthy

Net interest on the national debt has become one of the fastest growing segments of federal spending. When the national debt reaches the point where all newly borrowed dollars must be used to pay this mandatory expenditure, the U.S. government will have passed the event horizon that marks the boundary of the national debt death spiral.

Cities and territories in the United States that have crossed that crisis point have either gone through bankruptcy proceedings or their equivalent, or they have implemented major fiscal reforms that reversed their fiscal deterioration, wherein the best-case scenarios, they acted to restrain the growth of their previously out-of-control spending to restore their fiscal health.

There’s an old saying that applies for the U.S. government’s looming fiscal situation: “If something cannot go on forever, it will stop.” It’s only ever a question of how painful it will be when it does.


I’ve decided that I should stock up on extra heavy duty aluminum foil for the post apocalyptic times. I will barter with it.

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Saran wrap another great product to trade with many uses.


You stock up on aluminum…I’ll stick with lead as my precious metal…


The failure to reign in debt spending is the second greatest failing of both parties, behind only the commitment to secure our nations borders.

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Government has many failures.


Need more?

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Yeah the national debt is a real problem, and the FED should be the focus. They need to start lowering interest rates not increasing it which Trump has been very vocal about! Also another thing that could help is lower the Corporate tax rate to 15% which would be a huge game changer! Over hauling the Tax code is another! But you are right both parties have failed due to them wanting to protect their status class! This should be our biggest concern right now and it worries me for this is not going to be sustainable in the long term!


The problem with lowering interest rates is it encourages congress to spend more as we pay less in interest.

Not that it matters as one day soon, interest will become the largest line item in the budget.

Our tax system is totally broken. Congress has manipulated it so much so half of Americans pay no federal income tax and many of the non payers have a net positive gain from the EITC.

No the illegals are given a ITN which allows them to have taxes withheld and also eligible for the EITC. How does that make any sense.


I don’t see the connection between lowering CBR and Congress spending more. The entire premise of getting spending under control is an entirely separate issue.

I think it already is 4:2 ratio in what is borrowed and the interest that is accumulated as a result of borrowing.

Totally agree, which is why I am all for closing loopholes and going to a flat tax system

Not sure what this means specifically as it relates to illegals in terms of the acronyms you list here.


Well with a dem platform of SPEND BABY SPEND , just pray American voters dump the dems in 2020 !


How did Congress easily spend over a trillion a year in the Obama years, the zero percent interest rates. We paid less in interest in this years than During the Bush years when we had 8 trillion in debt. Paying less in interest had the effect of allowing trillion dollar deficits without spending a large portion for interest.

2018 the US spends 523 billion on interest and it is rising with each yard increase in the debt as well as rising interest rates.

I find it interesting how everyone clamors for the wealthy to pay higher taxes when they currently pay 70% of the Federal Income Taxes while half pay nothing. Truly the tyranny of the majority.

The cost of illegals in the US, 22 million is estimated to be 160 billion a year. Estimates are 30-40 million which makes th 160 billion low. That doesn’t count all th amnesty seekers allowing into the US in the last 10 years. The left as well as their shill media claim they pay their own way in taxes. That clearly is wrong.


Of course it does. I didnt say it had ONLY two…I said the debt was the second greatest. IMO.


Yeah, and the non politician Trump promised to be the game changer and pay off the 19.8 trillion dollar debt during his eight years in office…oops, look at where it’s at now.:rofl::rofl::rofl::rofl:

He also promised us that he would run balanced budgets. Bragged that it was easy. Yet with his first opportunity to prove it, he signed the biggest budget deficit in US history, and the kicker is, he still has support.

Isn’t it funny how all those Trumpers out there that made such a stink about the ND under Obama are crickets now that it’s ballooned to 23 trillion under Trump. Patronizing hypocrites.


Yep, and it was real damn important to Trumpers during the 2016 campaign. Now suddenly they don’t talk about it…:rofl::rofl:


I think it’s even more funnier how you frame a narrative that is based on ignorance and it’s obvious you don’t have a real understanding how the debt is calculated! It is a fact that the current debt accumulated is accountable to the previous administration within the first two years of the new administration! If you want I can pull the CBO’s just to prove how disingenuous and ignorant your statement is!


This is exactly what many of us were warning about when Clinton changed policy to finance our debt with short term notes.

In truth, we’re no more than one series of rate increases by the fed to put us into a debt spiral and that could happen in less than a year at any time.


Lmao, the statement was from trump…:rofl::rofl::rofl:


No it wasn’t! It was from you! Nice try!


After Obama gutted the military it was necesary to run some deficits to rebuild it.

Of course for all of the bitching of the left and the new “Never Trump Again” crowd reality bites.

Our economy is booming and tax revenues are rising so getting the debt under control will only be a matter now of getting spending under control.

Notice that the democrats whine about the spending but go apoplectic every time Trump or one of his cabinet secretaries/dept heads suggests cutting anything.

Democrats have never been serious about cutting anything but defense in my lifetime.


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