Letter: The risks of carrying high national debt

John Strauss indicates that we shouldn't worry about the national debt based on the idea it has expanded their economy by spending the money. Our current debt is $31.31 trillion and it is 120% of our Gross National Product. That means we couldn't pay off the debt in one year if we were able to commit everything the U.S. produced in one year.

Currently the interest on this debt uses 6.8% of our annual budget at a time when interest rates are extremely low. The average interest rate on our current debt os 1.605%. As the government has increased the interest rates this past year and as borrowing instruments mature, the renewal rate will increase substantially, very possibly doubling with mortgages going from 3% to 6%.

This will cause our debt payments to increase from the current 6.8% of our annual budget to 13% or more. This will leave much less money for our government expenses unless we continue to borrow even more money at the higher interest rates.

He indicates that corporations borrow money to expand their business. This is true, but they will not borrow at an 8% interest rate if they can't earn a return on the investment of much more than that 8%. The government cannot always use the money in a way that creates a payback or return.

A final point is that foreign countries (China) have purchased our debt. If they refuse to repurchase at maturity, it will drive interest rates up even higher and cost us much more to carry the debt.

Don Nish

Des Moines, Iowa