Washington's $5 trillion interest bill

These interest cost estimates assume Congress extends several current policies, such as the Bush-era tax cuts. They also assume reduced spending on overseas contingency operations.

NEW YORK (CNNMoney) -- Interest rates on U.S. bonds may be ridiculously low, but that doesn't mean the country's future interest payments on the national debt will be.

Uncle Sam will shell out more than $5 trillion in interest payments over the next decade, according to the latest projections from the Congressional Budget Office.

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That's more than half of the projected $11 trillion increase in debt held by the public during that period. Those figures assume that a host of expensive policies such as the Bush-era tax cuts are extended.

Over the decade, more than 14% of all revenue the government is projected to collect will be sucked up by interest payments.

That's a lot of money that can't be used on the country's other priorities.

Indeed, between 2013 and 2022, estimated interest costs will be:

• higher than Medicaid spending;
• equal to half of Social Security spending;
• close to what is spent on all of defense.

And here's the thing -- the estimated interest costs assume a fairly steady and moderate increase in rates over the decade.

The CBO assumes that the yield on the 10-year Treasury will rise from an estimated 2.3% this year to 5% by the end of the decade; and the yield on the 3-month T-bill will increase from 0.1% to 3.8% during the same time.

Deficits to decrease but not for long

If it turns out that rates rise one percentage point higher than CBO projects, that could add roughly $1 trillion to interest costs over the decade.

On the bright side, CBO's rate forecasts are higher than what the markets expect, CBO Director Douglas Elmendorf told lawmakers in February.

And, of course, rates could stay even lower than CBO projects if the United States remains a safe haven in the face of European debt crises or if the economy does better than expected.

But given how quickly markets can turn, "I think a particular risk over the coming decade is that interest rates will rise further and more sharply than we have in the projection," Elmendorf said.

However things turn out, a lot of the money paid in interest will go abroad, said Charles Konigsberg, president of the Federal Budget Group. That's because more than 40% of the country's public debt is owed to institutions and individuals outside the United States.

Those trying to score political points may well express sheer horror at the money that will be going out the door. But voters might want to check that those politicians are putting their fiscal plans where their mouths are.

So far there's a big disconnect.

A recent analysis from the independent Committee for a Responsible Federal Budget estimates that three of the four GOP presidential candidates' economic plans would increase deficits and interest costs, some substantially.

Newt Gingrich's economic plan could raise interest costs by $900 billion over the next decade; Rick Santorum's by $640 billion; and Mitt Romney's by $40 billion. But that number could rise substantially if he doesn't find enough measures to offset the costs of his latest tax cut proposals.

President Obama's proposed budget will be analyzed by CBO later this month, and the Committee plans to do so sometime this spring.