How high does the national debt have to be before it self destructs the economy?

Surely this is studied somewhere.

But the smart money says that we are getting close.

The cost of insuring against a default on U.S. Government bonds has been rising rather sharply of late.

Trillion dollar bailouts will tend to do that, you know.

The ratings agencies may even downgrade the credit rating of the United States of America in the relatively near future, from AAA+ to, well, something lower.

Let's hope, for the sake of our children and grandchildren, that they don't become junk bonds, paying pennies on the dollar.

Sustainability of the national debt is measured as debt interest as percentage of GDP. It is believed that as long as the interest remains at around 5% of GDP we will be fine. I, myself have trouble accepting this notion as it seems to run on the assumption that the economy will always remain healthy. If we ever head into a serious and prolonged recession or depression the weight of the national debt could crush our chances at recovery by eliminating any possible government response to it (financially).

Tax and spend policy is just as destructive as the current borrow and spend,

If we were truly concerned about the state of the American economy (or educated as to how it works) we would focus on electing a fiscally conservatice House of Representatives rather than focusing solely on the President. We did this in the Clinton era and found ourselves with a budget surplus. Pity, the congress "lost their way" as Sen. McCain said in his acceptance speech.

The tipping point is when the US can no longer pay enough interest and capital in order to prevent the debt from growing as fast as government income. At that point, the debt keeps increasing.

Note that it isn't necessary to pay back the debt. If it stops growing faster than government income, its influence will eventually be reduced. Government income roughly grows in line with GDP, which means that the US federal debt should grow less than 2 to 3% per year.

Of course, the government can always increase the tax rate, and (never mind the Laffer curve crap) increase its income. So it's not so simple - the US can stabilize its financial situation by increasing taxes.

The US federal debt (not counting unfunded liabilities or the net cost of the Fannie, Freddie, AIG take-overs and the general bailout being worked out) is about 10 trillion dollars. Every year in the last 5 years, Bush has added about 500 billion to this debt, which is not much more than the 430 billion in interest that the debt acrues every year these days.

I don't believe that the US government is in any danger of not being able to pay back its debt. I do believe that it has come to a point where this will require increases in the tax rate. I also think that the debt is hurting the US economy tremendously, by taking up 20% of the entire federal income. That money could have gone to better schooling, better roads, whatever. It is also a ticking time bomb, in that interest rates can go up. When that happens, it will start increasing the cost of servicing the debt. And that can go very rapidly if the Fed starts to worry about inflation.