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TJean: A Fed Debt Econ Lesson Econ please...(3 posts)

TJean: A Fed Debt Econ Lesson Econ please...PdxMark
Mar 25, 2003 5:17 PM
Ok, I was sick for a bit and have been looking back at past threads... I gotta get my internet viewing under control!!! Anyway, part of one thread confuses me...

TJean had said "the interest on the debt works out to about $60 per person per year." This confuses me. Federal interest payments are around $350 billion/year, according to the Bureau of Public Debt

Current US population is 290 million.

Isn't $350 billion/290 million people more like $1200?

I'm confused. I suppose there might be some accounting magic in that $2.7 trillion of debt is "intragovernmental holdings" compared to $3.7 trillion held by public, so that the $1200/person is maybe $700/person paid on "debt held by the public".

How did TJean get to $60/person?
Different numbers,TJeanloz
Mar 26, 2003 8:23 AM
$350 billion is the total interest cost of the total national debt (I believe, I'm using your numbers without verification). My $60 is the additional cost, per person, of the NEW debt issued to cover a $400B national deficit in 2003. Considering an average Treasury security paying ~4%:

400,000,000,000/290,000,000 = ~$1380 of new debt per person * 0.04 in annual interest = ~$55 in annual interest cost per person.

This was in response to the charge that the interest on an additional $400 B of borrowing would be cripling to the American economy.

If we look at total debt, the total US debt is appx $6.5 trillion (that's a lot of money...) which works out to around $22,257 per person. Assuming the same interest costs as above, which isn't entirely accurate, but is a fair estimator, total, per person interest cost is around $900 annually. Figures from the national debt clock:

If you are truely concerned about the public debt, note that the Government is happy to take your donation. Send a check, with the note: "gift to reduce the public debt" to:

P O BOX 2188
PARKERSBURG, WV 26106-2188
Thanks nmPdxMark
Mar 26, 2003 9:26 AM