Financial markets have been focused on recent increases in interest rates and the ones to come. The Federal Reserve after keeping rates near zero during the tenure of Mr. Obama helping to finance massive government borrowing has decide to act. Not necessarily sinister but curious. Overlooked to a certain degree is the impact raising rates will have on the budget deficit and the competition for government spending.
The Wall Street Journal had an interesting editorial on this subject, like it was some new revelation. Surprise, this is not new. Many have-including me- made the point that the incredible increases in national debt will increase government debt service and will squeeze the government fisc even tighter. https://www.wsj.com/articles/obamas-debt-interest-bomb-1491865888
The Congressional Budget Office now pegs the reported the federal budget deficit rose to $522 billion, up some $60 billion from the year before. But the ever worse news is net interest payments rose 30% in March from a year earlier.
Mr. Obama, along with the complacent Congressional collaborators created and left a fiscal mess. The national debt increased $ 10 trillion in the past eight years. Note: it is trillion, with a “T”. Well, so the debt doubled. Big deal. But it doubled from $10 trillion not from $1 trillion.
Do the math—a 2 per cent interest rate from the current rate on $20 trillion is what? Can it be 400,000,000,000? That is a lot of zeros. It is not that simple but the point is made.
The coming increase in debt service is just one more dark blot on the Obama callous way of governing. Someone-that is us- will bear the consequence.