Obama’s Debt Interest Bomb – WSJ 4-11-17 – Excerpts:
Friday’s Congressional Budget Office budget review for March: Rising net interest payments on the national debt.
CBO reported that the federal budget deficit rose $63 billion in the first half of fiscal 2017 (October-March) to $522 billion from a year earlier. But here’s the especially bad omen: Net interest payments rose $7 billion, or 30%, in March from a year earlier.
If that seems small, consider that interest payments rose $28 billion for the six months of fiscal 2017 to $152 billion. That’s a 22.2% increase, among the biggest in any single spending item highlighted by CBO. The increases reflect the growing debt but in particular the Federal Reserve’s decision to raise interest rates after years of near-zero rates.
America appears now to be re-entering the zone of “exploding deficits.” The first half of the 2017 fiscal year (Oct – Mar) rolled through with a hefty $522 billion deficit. If the second half of the fiscal year (Apr – Sep) follows up with a similar red ink bonanza, we will tip the $1 trillion deficit mark once again.
The Wall Street Journal further notes, “While Mr. Obama was doubling the national debt over eight years, the Fed’s monetary policies spared him from the fiscal consequences. The Fed’s near-zero policy kept interest rates at historic lows that reduced net interest payments even as the overall debt increased. The Fed’s bond-buying programs also earned money that the Fed turned over to Treasury each year, reducing the size of the federal budget deficit by tens of billions of dollars.”
If the U.S. Federal Reserve can pay out billions of dollars each year through “interest on excess reserves” to “foreign banks,” then it can most certainly grant U.S. citizens direct access to liquidity through a “Citizens Credit Facility.”
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