How the National Debt Affects You

Left unchecked, rising public debt could mean higher interest rates and a slower economy.

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But many experts argue that cutting spending is only half of the solution. "At some point, the government has to think about raising more revenue, which means higher taxes," Aggarwal says. "We are getting to the point where the economy has stabilized and if we don't address this debt problem, it's going to end up being a bigger problem." Higher taxes could hit consumers as early as 2012, when Bush-era tax cuts expire and debate heats up in Washington about how to tackle the debt problem.

[See 3 Big Lies About Cutting the Deficit.]

Higher inflation. Massive public spending by the federal government in the wake of the financial crisis has put some pressure on supply-and-demand dynamics, but has yet to spark meaningful inflation, in large part because of the continued weakness of consumer and corporate spending.

"Public demand is essentially crowding out private demand," Koesterich says. "It's the old definition of too much money chasing too few goods, and it breeds inflation."

But when demand returns from the private sector, additional competition will crop up for a limited supply of goods, which in turn will cause prices to rise. Inflation is particularly harmful for consumers because it erodes purchasing power and can ultimately lead to a lower standard of living. Savers will also feel the pain if the inflation rate outpaces yields on certificates of deposit or other savings accounts.

While this might sound like a doomsday scenario, experts say the fallout from chronically high public debt is more a matter of perceived risk than a clear threat right now. "What's sort of baked into the cake right now is the presumption that there's some sort of bipartisan action to rein in the deficit, which is by no means assured," says DeKaser. "I happen to be pretty optimistic that some progress will be made."

Only time will tell whether the Obama administration and Congress can get the recipe right.

Twitter: @mmhandley