Interest rates and the Deficit

Every so often, I think it is important to remind people the true effect of the enormous national debt on the economy. The debt is now approximately 14 trillion dollars. To put this in perspective, I think it best to look at the interest that gets paid on this sum. Right now, interest rates on treasuries instruments are a the very low end of the spectrum. think of it this way, if interest rates rise by 2% on all treasury bills notes and bonds it would put them much closer to "normal" rates paid by the USA on its debt. that 2% rise in rates, however, would require the country to apy an additional 280 billion dollars per year in interest. That is about one thousand dollars per person in additional interest costs per person in the country. Were interest rates to soar, the cost would be much greater.

The bickering over whether to cut spending by 78 billion for the year or 100 billion for the year is almost meaningless. The cuts have to be made and they have to be made right now!