Come on m'am, the point of a stimulus during a recession is for the government to borrow at low rates and spend it _now_ to prop up the economy into recovery, then pay for it later. Of course there's going to be interest on borrowed money, that's what happens when you spend money ahead of time. But to argue that $35 billion/year is an unreasonable interest rate is ridiculous. That works out to approximately 4.24% average APR on $825 billion. If this were unreasonable then nobody would ever get a mortgage.Rep. Paul Ryan (R-Wisc.), a stalwart friend of free markets and small government in Congress, got curious about the costs of borrowing all those hundreds of billions in stimulus bucks. Being a congressman, he's lucky enough to have the Congressional Budget Office (CBO) at his disposal to do any and all hard math he requires for his congressional duties.
And what did the CBO find?: The debt service alone from the stimulus will cost about $347 billion over the next 10 years. As the letter (read the whole thing here [PDF]) dryly notes: "Such costs are not included in CBO’s cost estimates for individual pieces of legislation and are not counted for Congressional scorekeeping purposes."
Yep. That's $347 billion in interest. Stimulating indeed.
One commenter:
And the total nominal interest on a 250K 15 year mortgage @ 5% is over 100 thousand dollars. On a thirty year it would be nearly equal to the original principal amount. And I didn't even need government accountant to tell me that.D'oh
345 billion over ten years is:
0.2% of likely GDP over that period
about 4% of our current debt load
about half of what our deficit is going to be just this year.
Numbers without context are something I expect from various nanny state scaremongers and others with similar aims.
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