$350 Billion in Interest on Stimulus

[Hubbs]

The hundreds of billions necessary for the stimulus package are being borrowed, mostly from China, because we already had a federal budget deficit for the next fiscal year. This means that, just like any loan, we have to pay it all back with interest. And how much is that interest? Almost $350 billion dollars over the next ten years, according to Congress' own budget office:

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."

Yes, you read that last part correctly - Congress doesn't even factor in the interest on the money it borrows. If any of us tried that when we wanted a loan of our own, we'd be laughed out of the bank.

That's $350 billion that goes to nothing. Zip. Nada.

[THEREALTOR1]

That's $350 billion that goes to nothing. Zip. Nada.

Thats not true, it goes to the lender. Congrats China!

[Thiebear]

Actually it goes to the Chinese.. Zip and Nada might be in charge though.

[Hubbs]

Actually it goes to the Chinese.. Zip and Nada might be in charge though.

Yeah, I meant "nothing" in terms of our own economy.

[DjTj]

Since all the extra money will devalue the dollar, the $350 billion will be worth a lot less by the time we pay it back to them. The net present value of our current loans will likely exceed any interest payments we have to make, so we will definitely come out ahead.

Suck it, China. :finger:

[ChocolateCitySkin]

lol dj... what china needs to do is use all that money to buy our crappy products.

[Hubbs]

Since all the extra money will devalue the dollar, the $350 billion will be worth a lot less by the time we pay it back to them. The net present value of our current loans will likely exceed any interest payments we have to make, so we will definitely come out ahead.

Suck it, China. :finger:

*raises eyebrow*

Using that logic, we should just take on hundreds of trillions in debt. After all, the dollar will drop so much that the interest we pay won't be worth anything.

[DjTj]

*raises eyebrow*

Using that logic, we should just take on hundreds of trillions in debt. After all, the dollar will drop so much that the interest we pay won't be worth anything.

Well, at some point, the Chinese will catch on and ask for a higher interest rate, but with interest rates are at historic lows right now and the Fed poised to print more money, I think it really is probably a good time to be borrowing money. (If you're thinking about taking out a mortgage, now would also be a good time for the same reasons).

Like any other good investment opportunity, however, it is limited, and if you try to exploit it overzealously, you'll create a bubble that will eventually burst, and your profits will disappear.

But I do think we can screw the Chinese ... in moderation.

[Thiebear]

August 2009: Toothpaste from China found to have rat poison in it.

China says it won't recall it and has informed the United States it won't remove it from the shelves.. its the only place they can get rid of it.

[deejaydana]

Since all the extra money will devalue the dollar, the $350 billion will be worth a lot less by the time we pay it back to them. The net present value of our current loans will likely exceed any interest payments we have to make, so we will definitely come out ahead.

Suck it, China. :finger:

Is that you Nancy Pelosi ?

[Hubbs]

Well, at some point, the Chinese will catch on and ask for a higher interest rate, but with interest rates are at historic lows right now and the Fed poised to print more money, I think it really is probably a good time to be borrowing money. (If you're thinking about taking out a mortgage, now would also be a good time for the same reasons).

Like any other good investment opportunity, however, it is limited, and if you try to exploit it overzealously, you'll create a bubble that will eventually burst, and your profits will disappear.

But I do think we can screw the Chinese ... in moderation.

Erm... I don't know the interest rates we got from China off the top of my head, but you do know that the Fed's interest rate has nothing to do with what we're charged on loans from other countries, right? The "historically low" interest rates are the ones that the Fed is charging American banks, not the ones foreign governments are charging our government.

[deejaydana]

Erm... I don't know the interest rates we got from China off the top of my head, but you do know that the Fed's interest rate has nothing to do with what we're charged on loans from other countries, right? The "historically low" interest rates are the ones that the Fed is charging American banks, not the ones foreign governments are charging our government.

I'm reminded of the part in Animal House where Belushi is trying to rally the frat house members, and he's completely misquoting history and one of the brothers says: "don't stop him, he's on a roll"

Borrow your way to a better life. Hmmmmm. *rubs chin*

[China]

Thats not true, it goes to the lender. Congrats China!

Hell, I'd be happy with one-thousandth of one percent of $350 billion.

[DjTj]

Erm... I don't know the interest rates we got from China off the top of my head, but you do know that the Fed's interest rate has nothing to do with what we're charged on loans from other countries, right? The "historically low" interest rates are the ones that the Fed is charging American banks, not the ones foreign governments are charging our government.

I'm pretty sure the interest rates we pay to China are listed here:

http://www.savingsbonds.gov/RT/RTGateway?page=institHome

They are not determined by the Fed, but they are of course correlated with the Fed, and yes, like all other interest rates right now, they are at or near historic lows.

P.S. I'm not sure why I'm expending energy defending my original post, which was a joke, but I suppose it's because you took it seriously and then tried to refute it with incorrect facts ... and now here we are.

[Hubbs]

I'm pretty sure the interest rates we pay to China are listed here:

http://www.savingsbonds.gov/RT/RTGateway?page=institHome

They are not determined by the Fed, but they are of course correlated with the Fed, and yes, like all other interest rates right now, they are at or near historic lows.

P.S. I'm not sure why I'm expending energy defending my original post, which was a joke, but I suppose it's because you took it seriously and then tried to refute it with incorrect facts ... and now here we are.

Ah. I took you seriously based off of some of the things you've said in other threads in favor of the stimulus. My bad. And I also assumed you were talking about the Fed's interest rates, because my brain simply jumped at a connection that wasn't really there. As Happy Gilmore said to Chubb, "You're right, I'm wrong. You're smart, I'm dumb. You're very good looking, I'm not attractive."

[DjTj]

Ah. I took you seriously based off of some of the things you've said in other threads in favor of the stimulus. My bad. And I also assumed you were talking about the Fed's interest rates, because my brain simply jumped at a connection that wasn't really there. As Happy Gilmore said to Chubb, "You're right, I'm wrong. You're smart, I'm dumb. You're very good looking, I'm not attractive."

I don't support the stimulus.

I oppose irrational opposition to the stimulus.

[karmacop]

I'd rather pay the interest on this stimulus spending package, which is necessary and might actually help Americans, than the interest on the 650 billion dollars that the last administration spent on a bogus war in Iraq.

Amazing how all of a sudden there are a ton of people here worried about the federal deficit, when we had a surplus when Bush took office and he turned it into a monstrous deficit. I didn't see a thread every other day on how much interest we'd have to pay on THAT deficit spending.

Just sayin'

[SkinsHokieFan]

I'd rather pay the interest on this stimulus spending package, which is necessary and might actually help Americans, than the interest on the 650 billion dollars that the last administration spent on a bogus war in Iraq.

Amazing how all of a sudden there are a ton of people here worried about the federal deficit, when we had a surplus when Bush took office and he turned it into a monstrous deficit. I didn't see a thread every other day on how much interest we'd have to pay on THAT deficit spending.

Just sayin'

I think you must have gone lurking for years

Many of us (including myself) posted threads about the costs of Medicare Part D the 2005 highway bill and the general crapola spending those 6 years

A specific one I remember, but can't find right now, was back in 2005 when we all :doh: about the debt ceiling being raised

[D'KanSkinFan]

I'd rather pay the interest on this stimulus spending package, which is necessary and might actually help Americans, than the interest on the 650 billion dollars that the last administration spent on a bogus war in Iraq.

Amazing how all of a sudden there are a ton of people here worried about the federal deficit, when we had a surplus when Bush took office and he turned it into a monstrous deficit. I didn't see a thread every other day on how much interest we'd have to pay on THAT deficit spending.

Just sayin'

You know~ it's not YOU "just paying" for this stupid stimulus bill; my great, great, great grandkids (via my crystal ball;)) were crying NOOOOOOOOOO over the debt we are going into~....... for "what"? These are the people that will paying this debt off~ NOT you.

E X A C T L Y~ NO one TRULY knows what is in that damn bill~ just like the first one, Pelosi and her sidekicks have kept us in the dark again:doh:~ THEN it went to the Senate, that is when we found out "SOME" of what of they wanted~- and they "cut" sex "protection" devices out of the bill~ whoop de dooooo..................

I still contend, that a 6 million dollar golf course IS NOT what we need~ but I guess we have to pay "back" those contibutors that obama is indebted to:doh: Perhaps this is why he is moving the census to the white house?

Jeez, GET a clue............They "gave" (generous of them) the "middle class workers" a $13.00 a week tax cut, this equates to a WHOLE whoppin $676 a YEAR. My electric company is "thrilled"~ they raised my electric rate and my gas company followed suit. Yeah, this stimulus isn't stimulating me at all.