Rep. Ted Budd Questions Sec. Yellen on U.S. Debt Burden

Washington, D.C. -- Today, Rep. Ted Budd (R-NC) pressed Treasury Secretary Janet Yellen on the mounting national debt. Under Rep. Budd’s questioning, Sec. Yellen could not provide a level of debt that would be unsustainable for the United States. She even admitted that, “we could have a substantially higher burden”.

The video of the exchange is below:

The transcript of the exchange is below:

Budd: Secretary Yellen, very briefly, do you believe that there is a level of debt that is unsustainable in our economy, and if so, what is that number? You can share that to me in dollars, or a percentage of GDP.

Yellen: I believe that the debt held by the public relative to GDP is around 105%. And that’s a number that is higher than we’ve had in most of the post-war period in the United States. But, it is not a number that I think is fiscally irresponsible or unsustainable. 

Budd: Madam Secretary, do you have a number that *is* the threshold or irresponsible, either in percentage or in dollars?

Yellen: Well one way that I would judge that is by looking at the real interest burden on the debt. That really is the better measure of the burden it places on our economy. This year that interest burden has actually been negative. Interest rates have been exceptionally low. This dates back to before the financial crisis in 2008, and most economists believe that there are deep structural reasons why low interest rates are likely to continue, even if nominal interest rates move back toward more normal levels, that interest burden will remain low.

Budd: If the interest rate was zero, what is irresponsible in percentage or dollars?

Yellen: Well, I think that if the interest rate is zero, the interest burden stays... If interest rates are zero?

Budd: Zero, let’s say as is, pick one of those and let’s say what is irresponsible as a percentage or total dollars of debt?

Yellen: Well if interest rates are zero, and negative in real terms, certainly we could have a substantially higher burden. Although there are always risks pertaining to the path of interest rates that need to be taken account of.


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