The Cost of Carrying Debt

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.

One of the biggest drawbacks of a high debt load is the cost of paying interest, which is currently one of the largest spending categories in the U.S. budget. At $241 billion last year, debt service—which buys the country nothing except a continuation of its debt—is effectively a program unto itself.