Obama Paying Bush II Interest Costs Neutralizes Deficit as Election Weapon
Obama Paying Bush II Interest Costs Neutralizes Deficit as Election Weapon
QBy John Detrixhe - Jan 22, 2012 6:08 PM CT
The U.S. bond market is neutralizing budget deficits as an election-year campaign weapon.
Interest payments will cost the government 3.1 percent of gross domestic product this year, according to Office of Management and Budget and International Monetary Fund data compiled by Bloomberg. That’s down from 4.8 percent in 1991, the highest in the past 50 years, during George H.W. Bush’s presidency. Since 1980, the only incumbent with a lower ratio than Barack Obama was George W. Bush in 2004.
U.S. debt dominated political discourse in the summer when Tea Party-backed members of Congress including Michele Bachmann balked at raising the debt limit. Treasury buyers have since boosted demand at auctions to all-time highs while driving yields to record lows even after Standard & Poor’s stripped the country’s AAA rating. Republican presidential candidates and moderators used the word “job” 43 times and “debt” only 11 at a debate in South Carolina on Jan. 19.
“There is very little political pressure from the bond market because the U.S. benefits from its status as the world’s reserve currency and safe haven,” Jeffrey Rosenberg, the chief investment strategist in New York for fixed-income at BlackRock Inc., the world’s biggest money manager, said Jan. 17 in a telephone interview.
More:
http://www.bloomberg.com/news/2012-01-23/obama-paying-bush-ii-interest-costs-neutralizes-deficit-as-election-weapon.html
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