Here’s something to ponder this Columbus Day weekend as President Obama and House Majority Leader John Boehner bicker like an old married couple about extending their Visa credit line to dimensions they will never, ever be able to pay off.
As any family that has lived beyond its means knows, making it from month to month and year to year is the name of the game.
The size of the debt is the elephant in the kitchen — always there, but something no one wants to acknowledge. Making the monthly payments: That’s Job 1.
That’s why in many ways this ideological tussle over the debt ceiling is upside-down. Every news story focuses on raising the $16.7 trillion ceiling, but no one talks about the way we finance that immense debt load.
Here are the numbers. In the fiscal year 2013 that ended this month, Washington was able to pay just 1.98 percent on the $11.5 trillion dollars in IOUs in public hands. That’s one-third the rate lenders demanded in 2000.
Looked at another way, the national debt would already be more than $20 trillion if Uncle Sam had to pay the interest rate he did at the turn of the millennium.
Currently, more than 80 percent of the Treasury’s borrowings are in short- and medium-term notes and bills whose rates are artificially suppressed. Meanwhile, borrowings that need to be rolled over in a year or less are up more than 50 percent from where they were in 2007.
Late last week, some of the biggest buyers of Treasury bills, including Fidelity, BlackRock and JPMorgan, said they had stopped buying the ones that will come due over the next few months.
So far, the markets have been pretty complacent when it comes to the Russian roulette we’ve been playing with an already messed-up laddering of our debts.
The fact that our mountain of borrowing has too short a shelf life has been blissfully ignored.
But for how long?