kombat wrote:In Canada, $0.25 of every federal income tax dollar collected is spent just paying the interest on our national debt. That's crazy! Who would run their own household budget that way? Where 25% of your income is sucked up just paying the interest on your outstanding debt?
Ok. My first response was going to be something funny like, "Oh stop bragging about how good shape Canada's finances are in" But then I looked and found the following:
Interest paid on US nation debt for FY 2012 = $375,867,511,477.84 (Source is US Treasury)
US federal spending for FY 2012 = $3.6 trillion. (Source is Wikipedia...yeah, I know)
That means we spend about 10% of spending on interest. That doesn't seem so bad. And it is decreasing because of Fed actions and falling interest rates. Amazingly, it is plausible that we could start making money off this if interest rates go negative as they have in some countries.
But even with Canada's figure and your analogy to household budgets, spending 25% on debt service is not as horrible as it seems. Many people spend 30% or more on mortgage interest alone. Perhaps that is irresponsible, but it is common. And few households have the borrowing capacity of the US. There is no shortage of people willing to lend us money. People might actually be paying for the privilege of having the USG hold their money right now. Of course that could change. But the USG still has the unlimited power to tax and it controls the printing presses. I know of no households with those resources available as a backup plan.
So, while I agree that things are getting out of hand, I think you need to have a little perspective before getting too excited about big numbers.