So says Bill Wilson of Americans for Limited Government here:
Currently, the U.S. is paying about 3 percent interest on the $14.3 trillion debt, or $430 billion of gross interest payments every year. If we had to repay everything over the next 30 years, principal and interest owed would amount to $908 billion out of revenue every year. That’s 41.7 percent of this year’s $2.174 trillion projected tax collections.
Is that affordable? Would repayment even be possible today? Perhaps just barely. The benchmark total debt service ratio for mortgage lenders is 40 percent. Anything above that, and a prospective borrower would not qualify for a loan. So even today, Uncle Sam would not qualify for a home mortgage.
I think the situation is much worse than that.
I remember that way back in 1990 the debt service ratio for a residential mortgage loan was much lower than 40 percent. Your mortgage payment had to be no more than 28 percent of income, and all your debt payments combined, adding in automobile and credit card debt, could not exceed 36 percent of income. Higher than that and you didn't get the loan.
By that standard, the US government today isn't even close at 41.7 percent, and would be laughed out of the bank.
The over-spending must stop.
