U.S. Debt Will Keep Growing Even with Recovery

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The debt of the U.S. threatens to overwhelm the federal budget -- even if the U.S. adds no new additional spending program.

If the cost of Social Security, Medicare and other benefits were combined, with interest payments on the national debt, that alone would cost 80 percent of all federal revenues by 2020.

That likely means either new taxes or spending cuts. And so far Congress has not shown the willingness to cut spending.

"In the end, solving our fiscal challenge - so many years in the making - will take both parties coming together, putting politics aside, and making some hard choices about what we need to spend, and what we don't," President Obama said in his weekly Saturday radio and Internet address.

The overall national debt will rise to 100 percent of the gross domestic product over the next few years, according to the International Monetary Fund and international economists.

Carmen Renhart, an economics professor at the University of Maryland and a former IMF official, says ordinary Americans may not be able to see the effects of the nation's fast-growing debt yet, but someday it will pounce.

"One thing we can say with a fair amount of certainty," she said. "We never know when the wolf will be at our door. The wolf is very fickle and markets can turn very quickly. And a high debt level makes us very vulnerable to shifts in sentiment that we cannot predict."

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