A U.S. ‘debt spiral’ could start soon as the interest rate on government borrowing is poised to exceed economic growth, budget watchdog says

Total federal debt is nearing an ominous milestone in a few years, but a potentially more troubling tipping point could also arrive soon.

According to the latest projections from the Congressional Budget Office, publicly held debt is currently at $31 trillion and is about 100% of GDP. By fiscal year 2030, debt is expected to exceed the 106% record set after World War II, then surge to 120% by 2036.

Fueling that accumulation are annual debt interest costs, which will more than double from today’s levels to $2.1 trillion by 2036, taking up a greater share of federal spending and further accelerating budget deficits.

A key driver in interest costs is the yield on bonds the Treasury Department issues to finance America’s massive debt and deficits. After years of ultra-low rates, the yield has been climbing amid previous Federal Reserve rate hikes, the unsustainable trajectory of borrowing, and concerns the Trump administration has made the U.S. less reliable in global finance.

The CBO’s forecast shows the economy will expand slower than its prior view, with nominal GDP growth (unadjusted for in...