The question is what is a sustainable rate.
[1] https://www.usgovernmentdebt.us/federal_deficit_percent_gdp
[2] https://www.reuters.com/article/us-usa-economy/u-s-economic-...
Where does this come from? the 10-year bond rate was closer to 3% for most of 2018 [1].
==So that's a 4x ROI correct==
You can't calculate ROI with an I. In this case, that is the 3.9% of GDP mentioned. Going forward, we may gain more tax revenue than we would pay in debt servicing each year, but that ignores the initial investment we made.
In reality, you would need to show that the present value of your annual tax revenues (0.29% of GDP - 0.076% of GDP) is larger than the 3.9% of GDP invested initially.
[1] https://www.thebalance.com/interest-on-the-national-debt-411...
"3.9% of GDP invested initially" How is this investing 3.9% of GDP? It costs 0$ in investment for the government to issue new bonds. The only way federal debt costs the country is in the interest spent on servicing it. As long as the tax base increases faster than the interest spent on servicing debt (and also accounting for population growth) there is no economic problem with increasing the federal debt.
And again, I am not arguing that the things we are spending the government money on are rational. I think we could do a lot better by cutting military spending and increasing funding for non-military research and infrastructure without deficit spending (which is certainly possible). But technically the current deficit spending is not unsustainable
What if the increase in GDP happened only because you borrowed money and spent it? What if you don't spend an equivalent amount next year, and that increase in GDP went away?
In this case, you want the money borrowed to be paid off completely by the taxation on increased gdp.
Which would be 1.03 * 3.8%=3.914% of gdp (deficit to be paid back next year) to equal 0.19 * 2.9%=0.551% (tax collection on increased GDP) of gdp, which it is very far from. Add the fact that the increased GDP is normally as welfare/income of poor people, which is taxed less.
This of course leads to main question. Is the growth sustainable? If the govt borrowing+spending go away tomorrow, would the GDP not contract? If yes, Then this growth was unsustainable and was debt fueled.
Interest is basically the adjustment made to value having money now vs having money in the future (how much would I have to pay you next year in order for you to not ask me to pay you now). An interest rate of 0% means $100 now vs some arbitrary point in the future are of equal use to you, which is irrational. Obviously getting $100 now is better than getting $100 in 5 years.
In fairness, interest rates aren't that low. I'm not sure if interest rates equal to inflation would be the same thing as interest of 0% in a 0 inflation world. I'm not an economist.