Accounting firm says US debt crisis is 'bigger than you think' - DC News FOX 5 DC WTTG

Top global accounting firm says US debt crisis is 'bigger than you think'

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NEW YORK -

What is the real cost of the US government's nearly $16 trillion debt?

"The debt crisis is likely bigger than you think," a new report issued last week by Deloitte, one of the world's largest accounting firms, concluded.

That is because interest payments add a whole new level of fiscal pain to the country's debt problem. Interest payments on the national debt alone, it noted, are expected to total some $4.2 trillion over the next decade.

And that number could fluctuate depending on rates.

The lead author of the Deloitte study, director Bill Eggers, stressed that US government debt could quickly spiral out of control if investors become less willing to lend more money.

"If interest rates go up by simply three percent over the next decade, the additional cost to the Treasury, just for interest payments, would equal the peak combined cost of the wars in both Afghanistan in Iraq," he said.

Not all economists are on board with the implications of the study.

"The major holders of government bonds are agencies and individuals within the US," Robert Stonebraker, an economics professor at Winthrop University, told FOXNews.com.

"So if you pay $1 trillion in interest on the debt, a lot of it will go back to Americans anyway."

But Eggers noted that a lot of the interest payments do go overseas.

"If you look at the interest payments going to foreign countries, soon we're going to be spending enough to essentially finance the Chinese military," he said.

Currently, foreigners own some $5 trillion in US government bonds, $1 trillion of which is owned by China.

Not all economists agree with the study.

"I think they're overhyping the need to fix the debit crisis in short run," Stonebraker said.

"It's not appropriate to cut spending during an economic slowdown -- that is exactly when you need deficit spending to stimulate the economy and get people back to work," he said.

Read more: FOX News

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