The U.S. National Debt has now increased more during Obama’s 3 years and 2 months squatting in the White House than it did during 8 years of the George W. Bush presidency.
The Debt rose $4.899 trillion during the two terms of the Bush presidency. It has now gone up $4.939 trillion since Obama began squatting. [Source: CBS News]
Our human mind seizes up when we see stratospheric numbers of a billion, or a trillion, or worse still, 15 trillion.
We’ve seen a number of striking ways to put into perspective our morbidly obese national debt of $15+ trillion. Here’s another way, explained by Duquesne University economics professor Antony Davies.
The United States currently pays 3% interest on the federal government’s debt of $15+ trillion — an interest rate that’s the lowest since the 1960s. This means interest payments on America’s national debt is THREE TIMES the annual operating expenses of the Iraq and Afghanistan wars.
But the long-predicted rise in interest rates (and of inflation) is beginning.
If the rate rises to 8%, which is what it was 20 years ago, interest payments on the debt will be larger than the annual cost of every war the United States has ever waged combined. The more money the government is spending on interest, the less money it has available to provide other services and entitlement payments, including Social Security and Medicare.
In other words, paying interest on debt is a really really really stupid way of spending money. That’s why sensible people either don’t get in debt or if they do, try to pay off the debt as quickly as possible. (See how a middle-class family succeeds in being debt-free and accumulating $1.5 million in assets, here!)
So what should be done?
Like the finances of a family household, the federal government should take advantage of today’s low interest rate and pay off as much of the principal as possible now, before interest payments rise to unsustainable levels.