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As Debt Rises, the Government Will Soon Spend More on Interest Than on Military

26 points by ciconia 8y ago

nabla9 8y ago
After you have read the article, ask yourself is it possible that the article is omitting something important. . . . [spoilers ahead] . . . ... like who owns the debt and receives debt service payments. https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21 https://www.marketwatch.com/story/heres-who-owns-a-record-21... Almost third of the debt is intergovernmental holdings, another ten percent is owned by the Federal Reserve who makes profit payments to Treasury. So basically 40% of the debt is internal debt and interest payments go back to the the government.
- lawtguy 8y ago
  It looks like the NYT article is taking from this CBO report: https://www.cbo.gov/system/files?file=2018-06/53919-2018ltbo.pdf https://www.cbo.gov/system/files?file=2018-06/53919-2018ltbo.... You'll notice that in the article and in the report, it's shown as "Net interest" which is defined by the CBO as the amount the US government pays out in interest payments minus what it takes in interest payments (CBO glossary: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/42904-CBOGlossary.pdf https://www.cbo.gov/sites/default/files/114th-congress-2015-...). So the interest payments on the ~40% of the debt the goverment owes to itself would cancel out.
  - nabla9 8y ago
    Net interest is defined in the terms of federal budget. Fed and many other government institutions are outside the budget. https://definedterm.com/a/definition/4513 https://definedterm.com/a/definition/4513 (gives same definition as your first source) net interest: In the federal budget, net interest comprises the government’s interest payments on debt held by the public (as recorded in budget function 900), offset by interest income that the government receives on loans and cash balances and by earnings of the National Railroad Retirement Investment Trust. https://definedterm.com/a/definition/4433 https://definedterm.com/a/definition/4433 ... Debt held by the public consists mainly of securities that the Treasury issues to raise cash in order to fund the operations and pay off the maturing liabilities of the federal government that tax revenues are insufficient to cover. Such debt is held by outside investors, including the Federal Reserve System. ...
- deleted 8y ago
  [deleted]
- EADGBE 8y ago
  > So basically 40% of the debt is internal debt and interest payments go back to the the government. Just like when you borrow from your 401(k). You're paying yourself interest back.
tumetab1 8y ago
Knowing Washington they will want to increase military expenses to "fix" the problem.

26 points by ciconia 8y ago

After you have read the article, ask yourself is it possible that the article is omitting something important. . . . [spoilers ahead] . . . ... like who owns the debt and receives debt service payments. https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21 https://www.marketwatch.com/story/heres-who-owns-a-record-21... Almost third of the debt is intergovernmental holdings, another ten percent is owned by the Federal Reserve who makes profit payments to Treasury. So basically 40% of the debt is internal debt and interest payments go back to the the government.

lawtguy 8y ago
It looks like the NYT article is taking from this CBO report: https://www.cbo.gov/system/files?file=2018-06/53919-2018ltbo.pdf https://www.cbo.gov/system/files?file=2018-06/53919-2018ltbo.... You'll notice that in the article and in the report, it's shown as "Net interest" which is defined by the CBO as the amount the US government pays out in interest payments minus what it takes in interest payments (CBO glossary: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/42904-CBOGlossary.pdf https://www.cbo.gov/sites/default/files/114th-congress-2015-...). So the interest payments on the ~40% of the debt the goverment owes to itself would cancel out.
- nabla9 8y ago
  Net interest is defined in the terms of federal budget. Fed and many other government institutions are outside the budget. https://definedterm.com/a/definition/4513 https://definedterm.com/a/definition/4513 (gives same definition as your first source) net interest: In the federal budget, net interest comprises the government’s interest payments on debt held by the public (as recorded in budget function 900), offset by interest income that the government receives on loans and cash balances and by earnings of the National Railroad Retirement Investment Trust. https://definedterm.com/a/definition/4433 https://definedterm.com/a/definition/4433 ... Debt held by the public consists mainly of securities that the Treasury issues to raise cash in order to fund the operations and pay off the maturing liabilities of the federal government that tax revenues are insufficient to cover. Such debt is held by outside investors, including the Federal Reserve System. ...
deleted 8y ago
[deleted]
EADGBE 8y ago
> So basically 40% of the debt is internal debt and interest payments go back to the the government. Just like when you borrow from your 401(k). You're paying yourself interest back.

tumetab1 8y ago

Knowing Washington they will want to increase military expenses to "fix" the problem.