Such high and rising debt would have serious negative consequences for the budget
and the nation:
Federal spending on interest payments would increase substantially as a result of
increases in interest rates, such as those projected to occur over the next few years.
Because federal borrowing reduces total saving in the economy, the nationís capital
stock would ultimately be smaller, and productivity and total wages would be lower.
Lawmakers would have less flexibility to use tax and spending policies to respond to
The likelihood of a fiscal crisis in the United States would increase. There would be a
greater risk that investors would become unwilling to finance the governmentís
borrowing needs unless they were compensated with very high interest rates; if that
happened, interest rates on federal debt would rise suddenly and sharply.