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Federal debt nears $16 trillion, with no easy way to pay it down

In the time it takes you to read this story, the U.S. debt will have grown by about $4.4. million.

The debt is now lurking just under the $16 trillion mark -- a number huge enough to be almost incomprehensible to the layperson. One way to visualize its magnitude: If you were to spend a dollar every second, it would take you 32,000 years to spend $1 trillion, or a mere one-16th of the debt.

"The national debt is certainly a ticking time bomb. There's no question that if we don't do something about it, it's going to go off," says Robert Bixby, executive director of the Concord Coalition.

Bixby, like most economists, thinks there comes a point when the debt becomes unsustainable -- when interest payments on the debt alone create an economic implosion.

"We're spending about $200 billion on interest now. That’s much more than we're spending on operations in Afghanistan, more than we're spending on Medicaid," he said.

Compounding the problem are the baby boomers. The first of the tidal wave of Americans born in the post-World War II years are now retiring. Many of them have had their retirement savings diminished by the bursting of the housing bubble and the subsequent recession. More than ever, they're counting on government entitlements in their senior years.

"We're facing this avalanche of seniors moving into Medicare and Medicaid and Social Security. So federal expenditures driven by Medicare and Medicaid are going to go up faster than the economy can grow," Alice Rivlin, senior fellow at the Brookings Institution, said.

Rivlin thinks the demographic and fiscal storm clouds that once seemed distant are moving closer.

"We don't need to make up scenarios. We're seeing them in Europe even as we speak," she said. "Countries like Greece, but much stronger economies than Greece -- Italy, Spain, to some extent France -- are finding that their debt has risen to a point that they can't borrow at reasonable interest rates."

When governments can't borrow at reasonable rates, homeowners can't either. Paychecks, productivity and investments all suffer.

Adding urgency is the approaching Dec. 31 deadline, when the temporary payroll tax cut and Bush-era income tax cuts expire, and when huge cuts to the military budget and other federal programs may kick in if Congress doesn't act.

This week, Congressional Budget Office Director Doug Elmendorf warned that the fiscal cliff, or "Taxmageddon" as some have termed it, may spark another recession.

"If allowed to occur ... sharp reductions in federal spending and increases in taxes will lead to a dramatic reduction in the federal deficit, trimming it by almost $500 billion next year," Elmendorf said. "That would be a significant tightening of fiscal policy and would probably lead to a recession early next year."

Even so, most economists agree that massive debt is not in and of itself a sign of economic Armageddon.

"What matters more than the level, it's the trajectory," Andrew Fieldhouse of the Economic Policy Institute said. "The trajectory is largely determined by decisions Congress has yet to resolve."

Rivlin agrees.

"We literally can’t do it without stabilizing the rate of health care entitlements over time and stabilizing Social Security and at the same time reforming our tax code so we can raise more revenue," Rivlin said.

But with both parties at an impasse in an election year, the combination of tax increases and spending cuts that most economists agree must happen seem unlikely to come from a deeply polarized Congress.

What clearly would help, economists say, is substantial growth in the economy. Four years of stimulative efforts, while causing yearly trillion-dollar deficits, have not yet made that happen.

Doug McKelway joined Fox News Channel (FNC) in November 2010 and serves as a Washington-based correspondent. Click here for more information on Doug McKelway