Bruce Bartlett: It's All About The Interest
CG&G alum Bruce Bartlett has an important column about federal spending in The Fiscal Times that does what Bruce does best: Say it straight with no BS.
What Bruce shows -- convincingly -- is that, contrary to those that say federal "spending" is the long-term problem, the real problem is spending in just one area -- interest payments on the national debt. Spending on virtually every other area of the budget is flat over the long term while interest starts to rise precipitously in 2020 and keeps rising over the next 60 years.
This isn't to say that interest payments on the national debt don't constitute federal spending because that obviously isn't true. But, as Bruce points out, the deficit for the non-interest part of the budget -- the "primary deficit" -- is only 1.7 percent of GDP over the long run and that makes it far less scary than the deficit scolds want us to believe.
Although Bruce doesn't mention it in his article, this situation argues persuasively for the government to convert its debt from short- to long-term so that the current low interest rates can be locked in for as long as possible. Doing that obviously depends on market conditions as well as inside-the-beltway desires, but any shift toward the longer end of the yield curve could be the most important deficit reduction effort the government will make over the next 20 years.