The more immediate danger is that the fountain keeps flowing.
The fear of a future crisis is distracting attention from the problems that the government’s dependence on debt is already causing. We, the people, are spending a staggering amount of money each year to borrow money. The interest payments on the federal debt now exceed the government’s spending on the military. They are roughly equal to the annual cost of Medicare. The sum is more than the government spends on anything except Social Security.
President Trump’s “Big Beautiful Bill” would deepen this profligacy, repeating the mistakes of the 2017 legislation on which it is based. Once again, Republicans are proposing to reduce taxation. Once again, they are proposing to force the government to borrow more to pay its bills. Once again, federal spending on interest payments would rise — and money spent on interest is money that can’t be spent on other things.
The government is on pace to pay more than $1 trillion to its lenders this year. The House version of Mr. Trump’s bill, already approved by that chamber, would increase interest payments on the debt by an average of $55 billion a year over the next decade, according to the Congressional Budget Office. The increase alone is enough money to fully repair every bridge in the United States.
Editorial Board, NY Times via:
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Total National Debt
What is the national debt?
The debt today stands at $36.2 trillion. The Treasury Department updates the national debt — to the penny — every day.
What is the national debt?
The debt today stands at $36.2 trillion. The Treasury Department updates the national debt — to the penny — every day.
The debt was relatively stable into the 2000s, but it began to grow substantially after President George W. Bush’s 2001 tax cuts. That law was followed months later by the Sept. 11 terrorist attacks, and then the U.S. went to war in Iraq and Afghanistan. Those conflicts were largely deficit-financed, as were other domestic policy moves in the ensuing years. Stimulus programs to recover from the 2008 Great Recession drove up borrowing, and later Congress extended Bush’s tax cuts. Finally, Trump’s 2017 Tax Cuts and Jobs Act and federal spending during the coronavirus pandemic under Trump and President Joe Biden led to sharp increases in federal spending, mostly paid for through borrowing. (...)
How does some debt create more debt?
As the national debt rises, the U.S. must pay more to maintain its borrowing. That happens in two ways.
First, gross interest costs increase. For example, 2 percent interest on $100 is $2. But 2 percent interest on $1,000 is $20.
But interest rates are not stagnant. As the U.S. takes on more debt, investors demand higher returns, forcing up interest rates. So that 2 percent rate the U.S. offered when it had less debt — say, in 2013 — jumps to the more than 4 percent rate the government has to offer to attract lenders now.
How does some debt create more debt?
As the national debt rises, the U.S. must pay more to maintain its borrowing. That happens in two ways.
First, gross interest costs increase. For example, 2 percent interest on $100 is $2. But 2 percent interest on $1,000 is $20.
But interest rates are not stagnant. As the U.S. takes on more debt, investors demand higher returns, forcing up interest rates. So that 2 percent rate the U.S. offered when it had less debt — say, in 2013 — jumps to the more than 4 percent rate the government has to offer to attract lenders now.
Washington Post via:
[ed. Aren't the Rich rich enough already? Wouldn't it be nice if Democrats fought for a massive middle class tax break as hard as Republicans do for the rich?]
