Debt-Happy US Faces Payback Time as Rates Rise

Cost of debt to skyrocket $500B in next 10 years
By Jane Yager,  Newser Staff
Posted Nov 23, 2009 7:29 AM CST
The National Debt Clock is shown near Times Square in New York, Wednesday, Oct. 8, 2008. The clock has run out of digits to record the growing figure.   (AP Photo/Kathy Willens)

(Newser) – Like a homeowner heading for mortgage default as interest rates rise, the US is heading for a nasty shock as cheap national debt suddenly becomes much more expensive. The White House estimates that the cost of servicing our $12 trillion debt will be more than $700 billion a year by 2019, up from $202 billion this year. That difference, the New York Times notes, is more than the federal budgets this year for education, energy, homeland security and both wars, combined.

Some $1.6 trillion, about 36% of the government's debt, is coming due in the months ahead. And the Treasury has to borrow $3.5 trillion more in the next three years, while also refinancing a huge amount of short-term debt issued during the financial crisis. “The government is on teaser rates,” says one advocate for lower deficits. “We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”