Printable View
My guess is US debt will not be a major problem until it is, and then it will be a crisis(real one). As long as there is good demand for treasuries, should kick the can down the road. But sure would be nice to have that money to spend on something useful. Pretty crazy spending more on interest payments than national defense now:
21 % Social Security
14 % Medicare
13 % Net Interest
13 % Health
13 % National Defense
Put another way, U.S. debt will not be a major problem (higher interest rates are just one of the ways debt still causes drag) as long as the world's largest provider of liquid assets is perceived as reliable and relatively safe.
Americans benefit from global dollar dominance. If global real demand for U.S. government securities were to fall for any number of reasons then, absent deficit reduction, we'd see a switch away from the current monetary dominate regime to a low growth fiscal dominate regime like Japan.