As Brian notes, by 2020, it is likely that half of our tax dollars will go to pay the interest on our debt. Along the same lines, here is a new paper asking the following question: Is there actually enough money in the world to finance the U.S. debt and, if so, at what cost?

The authors, John Kitchen of the Department of Treasury’s office of domestic finance and economist Menzie Chin of the University of Wisconsin, looked into economist Alan Meltzer’s assertion that “there isn’t going to be enough money in the world in the years to come to finance the U.S. budget deficits.”

They conclude that the money is likely there but that the cost will be brutal. If the U.S. budget stays on the current path, foreign holdings of U.S. Treasuries will have to rise from the current $4 trillion to nearly $18 trillion to meet U.S. financing needs. The annual interest payments on all that debt would amount to nearly $900 billion, or about 35 percent more than the current defense budget.

Conclusion: The explosion of spending comes mainly from entitlements. There is no way out of reforming entitlement spending.