On a radio discussion of the federal budget the other day, an interviewee said, “Do you realize that with our current debt level (now more than $17 trillion), if interest rates return to the 6.6 percent they were in 2000, interest payments on the debt alone will claim almost the entire discretionary budget.” Say what? Checking numbers (using data from www.USDebtClock.org as of March 7), it shows interest payments at 6.6 percent would be $1150 billion, almost equal to the entire $1264 billion discretionary budget. Interest payments could displace defense, education, VA, roads, Justice, to name just a few. At rates from just a few years ago. Hmm. Is anyone up there seriously thinking about this stuff?
Now truth be told, the president proposed only small increases in the discretionary budget this year. However, perspective is important. Consider: If one had an income of about $50,000 per year (close to the median income), the budget would be equivalent to spending $59,000 each year (overspending by $9,000) while one already had an unsecured debt of $250,000. The currently low interest costs would be “only” $3,600 per year. (And, oh yes, there is also an obligation to support an aggressive relative’s retirement.) If such a person said, “I think I would like to slightly increase spending again this year,” what would you say? A very mild response might be, “Well, this won’t last long.” It would be funny were it not so serious.