The US Congressional Budget Office (CBO) warns that America’s ability to meet the interest payments on its ever-growing debt is becoming unsustainable. The basic math is this: a nation’s ability to service its debt is a function of whether its rate of economic growth (G) is greater than the rate of the interest costs ®.

If G is greater than R, a country can sustain its debt. Indeed, if G is substantially greater than R, the costs of servicing the debt can actually go down as a percentage of its economy because the economy is growing faster than its debt costs. In this way, a country can “grow” its way out of debt.

But, if R routinely grows faster than G, problems arise. Slowly at first, then with increasing pace, the country spends more and more of its economic lifeblood to pay the interest. The government is forced to reduce the amount it injects into the economy (social programs, for example) and to increase the amount it takes out of the economy (taxes) just to keep pace with the interest. As it does this, the economy contracts, and so the government must spend even less and take even more. Credit is increasingly restricted, causing the economy to slow ever further, and a vicious cycle sets in.

What the CBO is suggesting is that the US is perilously close to the moment when R overtakes G. The CBO estimates that this death spiral will happen by around 2031, but it could come sooner if US debt rises faster than forecast (nothing like a reckless war in the Middle East to accomplish that) or the US political system keeps indulging its apparently limitless appetite for tax cuts it cannot afford, while simultaneously increasing defence and social spending.