After The Spending Party Comes The Hang Over: Treasury Faces Balloon Payment On Debt
Our nation has been borrowing money to finance the spending spree the politicians have been on at the rate of about $1 trillion a year. And a lot of that borrowing has been done at lower rates. But now with the “stimulus” spending spree and the bailouts adding to a pile of new debt on top of the debt pile that’s been growing for decades now the Treasury is suddenly faced with making some painful payments to our creditors.
Think a balloon payment on a subprime ARM mortgage, except with a $12 trillion principle.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
Just to inject a bit more perspective, the White House is estimating interest payments that very nearly approach the $787 billion we spent on the “stimulus” bill.
Meaning we’ll be paying the equivalent of the “stimulus” spending spree, the largest single spending bill in American history, every single year. And getting nothing for it. That’s just the interest on our debt.
What amazes me is that despite this we’re going to continue debating in the Senate a health care bill that will become another entitlement program like the out-of-control Medicare and Social Security programs. Another entitlement program the spending on which will grow faster than our economy and our wages do. Another entitlement program we simply cannot afford.
At this time we shouldn’t even be talking about new spending. We should be talking about what spending we’re going to cut so that we can start paying down the principle on this enormous amount of debt.
