Let us suppose that the government could reduce the budget deficit to zero. This would mean cutting not just $1.5 Trillion over ten years…but $12 Trillion over the same time period. And suppose we could pay $100M per day…every day…to reduce our debt.
How long would it take to reduce it to zero? Answer: over 404 years.
But wait…that assumes a zero interest rate. Presently 10 year treasury bills yield about 2%. If you assume that rate is constant over the next 400+ years, you will have to pay $295B per year in interest over the first years…and since $100M per day only produces $36.5B annually, you can’t get there. $100M per day actually grows the debt over $250B per year in the first years.
So, let’s change the amount and say you could pay $1B per day. That produces $365B per year and pays the interest of $295B and a small reduction in the debt. But…average interest rate on 10 year treasuries over a long period of time is more like 5%. If you assume a 5% rate, you need $738B per year in interest payments alone…and $1B per day allows the debt to continue to grow $370B+ per year in the first years.
Bottom line – given the size of our national debt, if interest rates ever get back to “normal,” it would take $2.21 B every day to reduce the debt to zero over 50 years. Remember, this assumes Congress and the Administration can first find $12 Trillion in cuts to government spending to balance the budget over the next 10 years.