To Focus on Interest Paid on Debt Is to Miss the Point

The Peterson Institute for International Economics is running billboard ads in Washington, D.C. about - you guessed it - the federal debt. The ads read something like this: Each Day It Costs a Billion Dollars Just To Pay Interest On All of the Federal Debt.

Without defending the horrid tax that is government spending for even a second, readers can surely imagine the intent of the ads: let’s get people worked up about not just the amount of federal debt, but the – horrors! – developing reality that interest payments alone are gradually swallowing the total federal budget. It all seems so scary at first glance, but at second glance it’s easy to see just how contradictory the Peterson Institute's message is.