View Full Version : White House Ignores Interest Payments in Claiming to Control Debt

02-16-2011, 01:00 PM

The Obama administration's statement that the government will not be adding to the debt by the middle of the decade clashes hard against the facts, Republicans say, leaving officials straining to justify the budget claim they've pushed repeatedly over the past few days.

As it turns out, the administration is not counting interest payments. That means the budget team plans to have enough money to pay for ordinary spending programs by the middle of the decade. But it won't have the money to pay off those pesky -- rather, gargantuan -- interest payments. So it will have to borrow some more, in turn increasing the debt and increasing the size of future interest payments year after year.


02-16-2011, 01:15 PM
That is probably a realistic prediction. By the middle of the decade the bond market will have collapsed and everyone who can will have dumped their bonds. The Fed will be the only buyer and it will return the interest payments to the treasury. Voila! No more interest payments.