CBO predicts doomsday in 2037

Under CBO’s extended alternative fiscal scenario, however, revenues would not rise much above their average share of GDP during the past 40 years, so the gap between revenues and spending on government benefits and services would become increasingly large. As debt grew, so would net federal spending on interest, which would rise from about 1½ percent of GDP today to 10 percent by 2037. All told, under the extended alternative fiscal scenario, debt held by the public would balloon over the next quarter century, to almost 200 percent of GDP by 2037—a clearly unsustainable path for federal borrowing.

A rising level of government debt would have another significant negative consequence: Combined with an unfavorable long-term budget outlook, it would increase the probability of a fiscal crisis for the United States.In such a crisis, investors become unwilling to finance all of a government’s borrowing needs unless they are compensated with very high interest rates; as a result, the interest rates on government debt rise suddenly and sharply relative to rates of return on other assets. That increase in interest rates would reduce the market value of outstanding government bonds, inflicting losses on investors who hold them. Such a decline could precipitate a broader financial crisis by causing losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt—losses that might be large enough to cause some financial institutions to fail. Unfortunately, there is no way to predict with any confidence whether and when such a fiscal crisis might occur in the United States. In particular, there is no identifiable tipping point of debt relative to GDP that indicates a crisis is likely or imminent. All else being equal, however, the larger the debt, the greater the risk of a fiscal crisis.
--http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf

Bernanke thinks it will happen sooner than that: "By definition, the unsustainable trajectories of deficits and debt that the CBO outlines cannot actually happen, because creditors would never be willing to lend to a government with debt, relative to national income, that is rising without limit. One way or the other, fiscal adjustments sufficient to stabilize the federal budget must occur at some point. The question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people adequate time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will come as a rapid and painful response to a looming or actual fiscal crisis."
--http://www.cnbc.com/id/41491193/