The Cost of Carrying Debt: New at Reason

Sometime in 2017, the total U.S. national debt will hit $20 trillion—more than the total gross domestic product (GDP) of the country in a year. That figure is projected to keep growing over time, thanks to rising annual deficits. Debt held by the public, a measure that counts all federal securities sold to individuals, corporations, and state and local governments, plus foreign investors, currently clocks in around $14 trillion. That figure is expected to hit $23 trillion in 2026.

There are risks to carrying a debt burden this big. It increases the nation’s susceptibility to a fiscal crisis if interest rates rise, and it limits the sorts of projects government can take on in a constrained fiscal environment. The greater the debt, the greater these risks become, writes Peter Suderman.

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