U.S. Debt Load To Increase 75% in Next 10 Years

You read that right: U.S. debt will nearly double over the next 10 years.

In fact, according to the Congressional Budget Office and their latest Budget and Economic Outlook, debt held by the public will catapult from this year’s $14.17 trillion to $24.9 trillion in 2027.

That’s $24.9 trillion with a T!

They say growth in spending — particularly Social Security, Medicare and net interest — will outstrip revenue growth. And that’s just the tip of the iceberg.

The culprit: Reckless fiscal policies that are now coming home to roost.

But the fact is this is just the latest installment in the sovereign debt crisis that I’ve been warning about. And things are going to get worse before they get better. Consider …

  • Rising interest rates that triple debt-service costs over the next 10 years — from this year’s estimate of $270 billion to $768 billion in 2027.
  • Anemic economic growth, with GDP running at an average annual rate of 1.9% in years 2022 to 2027.
  • An aging population and rising per capita healthcare costs.
  • Reduced lawmaker flexibility to use tax and spending policies to respond to unexpected challenges.
  • Increased probability of a U.S. fiscal crisis, including greater risk that investors will become unwilling to finance the government’s borrowing.

But there’s more: Debt held by the public as a share of GDP is through the roof …

As you can see from this chart, debt held by the public goes from 77% of GDP in late-2017 to 89% by 2027 — levels not seen since 1947.

But here’s where it goes really off the rails: The study projects 10-year interest rates will top out at 3.6% in the later part of the projection period. That’s a 50% increase from current levels.

And I even think that’s conservative: The 10-year could easily reach 4%, 5%, even 6% as this crisis unfolds.

Is that a big deal? You bet! The CBO says a 1% increase in interest rates would add an extra $1.6 trillion in cumulative deficit AND raise U.S. Treasury borrowing by $264 billion.

And don’t forget: These projections don’t account for any fear premium associated with a debt-rating downgrade, a sudden spike in interest rates or a waning foreign appetite for U.S. debt. Plus, they don’t even touch President Trump’s campaign promises of…

  • $1 trillion in infrastructure spending over 10 years.
  • Increased military spending.
  • Funding the Mexico/U.S. border wall.
  • Tax cuts for individuals and corporations.
  • No change in entitlement spending.

What does this mean for you?

Simple: When the government fails to meet its obligations, it’s going to come after you — the taxpayer — for more money.

And it’ll do the same for businesses and companies of every stripe — you can mark my words.

This kind of reckless behavior will ruin governments … disrupt entire markets … and wipe out central banks and treasuries in the process.

Plus, it will devastate government pensions and government benefit programs of all kinds.

And it will push leaders toward more desperate measures, including confiscations and outright seizures.

So, hold on to your hats! And make sure you have sound investment advice, like my members enjoy.

Best wishes,

Larry


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Comments 26

  1. King Ralph February 1, 2017

    That’s what happens when you have a TV game show host as president.

    Reply

  2. Brent Dickey February 1, 2017

    I thought the Federal (US) debt was already somewhere between $20 and $21T, ?

    Reply

    • bocacassidy February 6, 2017

      The article is well written…but actually understates the real gravity of the situation….viz. the US national debt is ALREADY 20 trillion …and .25 trillion………..by 2027 ? Nooooo! It will pass that mark before 2000!
      On the positive side : The situation worldwide is…WORSE ! In any case – there will be hell to pay ..Stagflation is a high probability .Only with the best of diplomatic skills ….and some luck…will major military conflict be avoided !

      Reply

  3. Books February 1, 2017

    So where’s the revenue? Tax breaks for the wealthy, tax breaks for corporations, millionaire’s money hiding overseas. The programs for the public are necessary. Corporate CEO paychecks that, if more reasonable, could
    cover the costs being taken away from employee’s healthcare/and/or pensions. Everyone will get old. The programs like Social Security and Medicare don’t just help the elderly, they help their adult children as well. If the elderly don’t have Social Security and Medicare the costs would fall on their adult children, thus impoverishing the next generation’s security. Then that would also mean the grandchildren would have less for their education and healthcare.

    Reply

  4. deerflyguy February 1, 2017

    The only reason we have the debt we have is because those same government flunkies (elected lawmakers) that were supposed to be matching the contributions to our pensions and social security contributions – BUT – instead put nothing away except an IOU, and spent our real contributions on other social programs that had no scheduled funding, just to make themselves look good to a particular voter base. They, if fact, blew through all the real money we invested on ourselves and relied on future tax dollars to make good on that lost money and the IOU’s! Of course, while they performed this chicanery, they were feathering their own nest with big paychecks, multiple benefits, and fantastic retirement programs! Now, we’re left relying on the same group of inept jerks that did this to us, to find a way out of the problems they gave us? Does anybody really expect that they have the answers to our dilemma? All is lost, my friends! There is no positive answer! Save yourselves and don’t rely on government to do it for you.

    Reply

    • Curvyone February 8, 2017

      Very well said

      Reply

  5. will Oakley February 1, 2017

    If the coming problem is Social Security, Medicare and net interest, we can get rid of the first two factors by simply taking the income limit off Social Security and Medicare taxes, and adjusting the tax rates to match expenditures.
    This is a pragmatic fix not favored by dogmatic party politics that are disconnected from reality.
    If we could ever get to a balanced budget the inflation rate would slowly reduce the National Debt as a percentage of GDP-GNP.
    But the larger problem is demographic, the US population skill set is not matched to the need of an information intensive economy, and it will get worse. Manufacturing will likely come back soon, but will be highly automated and produce few blue collar jobs. Silicon valley has tens of thousands of high paying job vacancies, but all require degrees in computer science, automation, biotech, or artificial intelligence.

    Reply

  6. Mary Saunders February 1, 2017

    There are wild cards. If Robert F. Kennedy can expose the tsunami of iatrogenic illness in the U.S., and if other sources of cost can be addressed, a possibility exists to decrease ill health on many fronts, by increasing health. I understand this is a long shot, but publicizing better-case scenarios seems worthy of consideration.

    Reply

  7. G13Man February 1, 2017

    how can it wipe out the central banks ? , They own the debt !

    Reply

  8. TQ February 1, 2017

    We need to think of solutions and give them to the government ‘after’ they are announced to the public. Easy ? No the media is controlled, politicians for the most part vote for their profit not yours.

    What is the answer ? Find a way to tell someone who does not care about money as much as their legacy who will be heard; Please tell us who. No one should receive social security, or Medicare, Medicaid, or food stamps that because of their origin and/or were on a visa receiving back most if not all of their taxes with high wages, or ( here , or their parents were prior to their birth) as they steal from any government help as well as their children who by that nature are here illegally and born illegally as a criminal not a citizen, which means stealing by design. We need to tax 28 % of all outgoing money from these illegal people and their acts to pay for the their and other’s like them here for their needs instead of us paying for those that stole from us including our birth right.
    There should be an extra tax on the companies that promote the B1 visas that allow workers to not pay taxes we would pay for the same job, at the rate, not paid by the employee, and those companies that pay per diem instead of taxable wages instead of normal wages to pay less per employee as well , or refuges that were not in any proven danger who had plenty to live on but used a fake dangerous excuse and received government subsidies.
    We should crack down and imprison all government agency employees that commit unemployment, disability and other fraud on behalf of other people they allow to abuse the system; make them all take lie detector, question things like length of benefits receive as they often go the limit and statements that are the same as they are often lazy and go with what is agreed on, and fire them if they did based on none probable event that can easily be found by ‘R’ searches within days.

    Reply

    • Crispy critter February 3, 2017

      I have no idea what the hell you’re talking about.

      Reply

  9. Conrad February 1, 2017

    Mexico is paying for the wall 😉

    Reply

  10. F151 February 1, 2017

    Our debt load is very dangerous. Obama doubled the national debt in just 8 years. We really need to look to balance our budgets. And…we are going to need to sell trillions in new bonds…if such is even possible.

    Reply

    • Steve R February 2, 2017

      The spending blueprint is written by Congress so you can’t just blame Obama. Republicans are in charge of the budget and have been spending recklessly. Economics is not partisan.

      Reply

  11. Joe luongo February 1, 2017

    Hi Larry absolutely things are going to be out of focus in the next ten years. I believe that government and banks are in trouble. America has changed tremendously in the past fourty years. I’m not really a stock investor but know you’re on the right track on the things you say and have predicted. But I believe in God and some how Larry America has gone through a lot of problems through years and fears and somehow stayed together and I believe in the American way. Like for you to run for president Larry maybe you can turn things around. Look at what got elected you believe it. A man like that so far he’s stirring up a lot of Americans imagine what’s going to happen next China Saudi Arabia Iran who knows who’s the fist person he’s going to piss off. Hua Russia that’s exactly what this – is going to do. americans should get together and kick him out. Wanted to know if you would invest my money you’re way I trust you please call me Joe Luongo champion family man outstanding citizen and heroic man

    Reply

  12. Steve R February 2, 2017

    As a conservative, I say Spending $14 billion on another wall is reckless spending. We already have a wall and fencing that’s 650 miles long plus 20,000 border patrol agents. Net migration from Mexico is almost zero now. Half of illegals come by way of airport or water borne. They know how to use shovels! Don’t waste taxpayer’s money!

    Reply

    • Gregory P Elkins February 6, 2017

      AMEN!!!!!! A wall will only slow down the most ill equipped to cross it. The cost per person stopped will be ridiculous. Make sure they cannot get jobs when they arrive and they will stop arriving.

      GPE

      Reply

    • Vic Venom February 8, 2017

      The next thing we know, Canada will be building a wall to keep Americans out……..

      Reply

  13. Bob Zames February 2, 2017

    Larry
    Have you read a favorite book of mine, Non fiction, The Creature from Jekyll Island by G. Edward Griffin? I’m reading the book for the second time.
    It’s A scary, eye opening account of The Federal Reserve, and the world banking system scam.
    The book should be a must read for all adults.
    Bob from Ohio

    Reply

  14. Bret Smith February 2, 2017

    Why are most pundits afraid to mention how much all of the USA’s military (mis)adventures have cost from the Vietnam War forward to today ?
    It costs a lot of $ to invade, occupy, and constantly reinvade and reoccupy Cheney’s interests…

    Reply

  15. Mike February 2, 2017

    Our gargantuan debt is a direct result of voodoo economics. Reagan tripled the debt. George H. W. Bush reversed some of this and was abandoned by his Party. Clinton continued but his balanced budget was destroyed with Bush II’s voodoo tax cuts. Obama took the coward’s way out and failed to reverse 99% of Bush’s debacle. The National debt has gone from 985 billion in 1981 to 20 trillion today as a direct result of voodoo. Now Trump is advocating for voodoo 3.0. If anyone is serious about the debt they must raise taxes and cut spending kinda like Republicans said before the advent of voodoo.

    Reply

  16. GIL EISNER February 2, 2017

    CALLED THIS OUT IN A SEPT 2015 BLOG CALLED THE PARADIGM PAPER ON THE SIZE OF GOVERNMENT AND RE-ITERATED IT IN A CURRENT POST ON THE DOLLARBILLBRIGADE.COM AS WHO’S GOING TO PAY. WAKE UP FOLKS….

    Reply

  17. Steve G February 4, 2017

    Larry if the United States dept. is 68% our own and that we pay interest to ourselves – WHY can’t we just erase the dept. and start new simply saying why not let the debtors simply say I’ll take .10 cents on the dollar and wipe out the dept.???

    Reply

  18. Margaret Hannigan February 7, 2017

    How is your investing advice going to help me overcome getting my home, my IRA’s, , etc. seized by the US Govt?

    Reply

  19. Pat Quintilian February 9, 2017

    The debt is a real threat to our economy and way of life. Please explain to me how building a wall which has no real deterrent value and will cost billions is not being talked about. This policy alone will have very serious consequences, why are the Republicans going along with this horrible idea. I am a fiscal conservative, what is going on here.

    Reply

  20. Kelly February 9, 2017

    Look at Venezuela to get a glimpse of what’s going to happen to the USA.

    Reply