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.”