We are using about 8% of our taxes to pay interest on the Federal debt.
If interest rates rise 2%, we would be spending almost 20% of our tax base to pay interest on the debt.
What happens to the value of the bonds when interest rates rise?
They tend to go down in value.
Now I want to make sure this next part is VERY clear... that doesn't change how much debt the US government has. A 10,000 bond could become a 9,000 bond on the secondary market if interest rates rose, but the US government would still owe 10,000 and that final principal payment would still be par... which is $10,000.
Exactly. The amount of interest on the debt doesn't go up, even if interest rates go up because the bond pays a fixed rate. The government could in theory retire those bonds buying them and issuing new ones and the amount debt would go down. But that would not change the cost because the new bonds would pay higher interest rates. Same-same.
So if the amount owed remains the same, where is the crisis? Down the road perhaps, but we have the growing economy and inflation working in our favor as well. As I said above, this is a problem, but a completely manageable problem for now.