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Interest Payments on National Debt

 
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PostPosted: Tue Mar 16, 2021 6:20 pm    Post subject: Interest Payments on National Debt Reply with quote

Interest payments on National Debt as percentage of GDP shrinking, because higher interest rate debt in the 1980s and 1990s maturing:

https://finance.yahoo.com/news/yields-long-way-sting-yellen-090000818.html

(Bloomberg) -- As rising government bond yields stir up angst on financial markets, one person who sounds unfazed is U.S. Treasury Secretary Janet Yellen. Her own go-to measure of debt costs is headed in the opposite direction.Interest payments on the national debt fell last year, to $345 billion or 1.6% of gross domestic product. Theyíre on track to shrink further in 2021 -- even after all the pandemic spending, plus a debt-market selloff thatís taken 10-year Treasury yields to the highest in more than 12 months.

Thatís because the government is rolling over bonds it sold years or decades ago, when its borrowing costs were higher. It would take Treasury yields averaging about 2.5% across all maturities -- well above where they are now -- to turn that trend around, according to calculations by Bloomberg Intelligence. Even then, U.S. debt service costs would be comfortably lower than theyíve been in the recent past.

All of this helps explain why President Joe Bidenís administration, which just passed a $1.9 trillion pandemic relief bill, is lining up trillions of dollars more spending to help infrastructure and industry -- and isnít concerned if it has to borrow a chunk of the money.
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