Wednesday, January 14, 2009

Debt questions

Love to read all of the experts take on whether or not to pay off the Federal debt and how to do it.I am in no shape or form an expert and make no claim to be.They all do their number crunching relating the pros and cons related to the GDP.However,I never see them weight the enormous debt service (interest) very heavily.Or compute the drag on their formula.They always stick to principal.If we spend half a trillion on debt service as we are on pace for in fiscal 2009,don't you need to account for that wasted revenue as well as the investment potential of it?In other words,if we didn't make the interest payment,we just saved $500 billion in the 2009 budget.But the X factor is what we also could have done with that revenue and what that may have generated.For example,using the money to subsidize a corporate tax reduction as part of the stimulus.This would likely result in businesses expanding and hiring which creates wealth and a GDP boost.This in turn boosts tax revenue further inflating the value.It's kind of like paying back your student loan if you're employed in a different field.You're paying off a loan providing no value to you.You not only have the credit on your budget,you've lost the investment potential of it as well,so it could be a much larger number.Seems to me the cancer of this interest on the Federal budget needs to be of vital interest.More to come...

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