When a beneficiary is overpaid benefits they often get a couple of months to pay in full or a a small monthly deduction from future benefits. In most cases, this is used as an interest free loan. Some retiree's game the system and purposely under report earnings. If even a one percent charge was added, many would report properly and timely. We are loaning money at zero interest for fraudulant behavior.
We pay about 5% on long-term debt. Greece pays 15%. If we default and start paying 15% like Greece, it will cost an additional $1.4 trillion per year in interest, based on 10% times debt of $14 trillion. The additional $1.4 trillion in interest is equivalent to about 2/3 of the federal government's annual revenue.
For every 100 basis point increase in interest rates, the interest on the $14 trillion debt increases by $140 billion. Flirting with the disaster that would be caused by a default results in less confidence by investors on the risk of Treasury securities, increasing interest rates.
We need to do everything possible to pay off the debt. How many billions of dollars can you cut from programs? The budget... more »