To the editor;
Unless you are an economist or an avid investor, you probably do not pay much attention to the bond market, yet its transactions directly affect your financial welfare because it is the place where the $32 trillion of long-term U.S. Treasury Bills are bought and sold. Many believe that Federal Reserve policy is the primary determinant of interest rates in the economy, but the fed sets short-term bank rates that have only an indirect effect on most interest rates. It is the market-determined yield (interest rate) on the ten-year Treasury Bill that is used to directly determine rates for most consumer debt including mortgages, auto loans, credit card debt, and business loans.
For decades, the stability of the U.S. financial system has caused Treasuries to be perceived as a “risk-free” investment. Countries used them as a store of wealth to guard against volatile economic conditions, and investors sought them out as a hedge against riskier investments. As a result, except for periods of persistent inflation, Treasury debt has carried low rates of interest, allowing the government to finance deficits cheaply, and consumers to borrow at relatively low rates of interest. For the past several months, however, the yield on ten-to-thirty-year Treasury bonds has trended upward and now is at a twenty-year high. This has increased U.S. borrowing costs and the amount that consumers pay on their loans. Estimates are that the U.S. government will pay $1 trillion in interest this year on outstanding Treasury debt, more than the Defense Department budget and only exceeded by spending on Medicare and Social Security.
Treasury yields tend to increase if investors perceive that inflation has become persistent—rate increases guard against a loss of value due to a dollar that becomes less valuable over the period of inflation. That may explain some of the recent increase in Treasury yield. Although inflation has significantly declined after heavy COVID spending, the rate has stubbornly remained above the Fed’s target under Trump. The continued closure of the Strait of Hormuz and continued conflict with Iran as well as new tariff initiatives are likely to increase inflation in the near future.
Several commentators, however, have a more worrying interpretation. They point to the fact that the U.S. national debt has reached $40 trillion, the highest in history. The astronomical debt has been accumulated over decades by both parties which have enacted tax cuts while increasing spending without regard to the cost. Trump’s One Big Beautiful Act added an estimated $4.7 trillion to the deficit and his spending on the Iran War will add still more. With mid-term elections looming, neither party is likely to advocate tax increases or spending cuts to reduce the debt. Given these conditions, bond investors may be signaling that they lack confidence in U.S. policy makers to control deficit spending and that they perceive U.S. Treasuries as no longer being a risk-free investment that they are no longer willing to finance at low interest rates.
The opportunity cost of refinancing an enormous national debt at a cost of $1 trillion or more is that spending on beneficial social welfare programs as well as necessary technology development may be restricted or eliminated. If bond investors have decided that U.S. Treasuries are no longer a risk-free investment, the era of low-cost financing of government deficits may be over along with low-cost mortgages. Long term consequences could be dire if yield rates continue to rise and spook investors to demand even higher yields in a debt spiral. In any event, the warning signs seem clear that the days of piling deficit upon deficit without regard to the financial consequences may be over.
Robert D. Russell, PhD
Harrisburg, Pa.
Robert:
As always, we are grateful for your letters offering well-informed views on newsworthy topics. Our comments are usually limited to some version of an affirmation which surely will date us: “Right on, Brother.”
In this case we think you may be understating the risk. It used to be said that “the sun never sets on the British Empire.” Then, after a couple of World Wars, it did, and we more or less took its place.
The Council on Foreign Relations has called the U.S. dollar “the world’s principal reserve currency since the end of WW II.” We suspect that through the U.S. government’s increasingly insane defense spending, coupled with relentless tax cuts for the rich, the sun may finally be setting on the dollar.
This is not to say that we believe the U.S. should rule the world. It’s just to say that if we’re going to step down from our prior position of global dominance, it might be well to do so intentionally, according to some sort of plan.
Also, specifically, we must take issue with the following sentence: “The astronomical debt has been accumulated over decades by both parties which have enacted tax cuts while increasing spending without regard to the cost.” Intentionally or not, this seems to suggest that the both parties have been equally irresponsible.
Far be it from us to defend the Democratic Party, but let’s recap some ancient history:
The Kennedy and Johnson administrations, for all their massive spending in Vietnam, ended with a budget surplus of $3.2 billion.
Nixon left office with a budget deficit of more than $6 billion—and inflation at around 11 percent.
Ford made Nixon look prudent, leaving with a $65 billion deficit.
Carter nearly held the line. His last deficit was $79 billion. He lowered it, though, as a percentage of GDP, from four percent down to under three percent.
Reagan doubled the deficit and tripled the national debt. Bush #41 carried on.
Clinton, like the good neoliberal he was, balanced the budget for the first time since Johnson, mainly by screwing the poor.
Since then it’s been impossible to overlook, though it’s rarely mentioned and never truly addressed: fiscal prudence is for Democrats; Republicans can do as they like.
The Editor
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We Should Act Like Major Watson
Dear Editor:
I seriously doubt most Americans view our present political circumstances as I do but I believe a case could be made that we are reliving the dilemma the colonists faced: the government that held authority over them didn’t represent them.
I recall (so vividly) elementary school lessons pertaining to “taxation without representation.” We need not prove whether we can govern ourselves but perhaps need reminding, our government doesn’t own us, we own it. We’re obligated, therefore, to reclaim what is rightfully ours or we will lose it.
I was reminded (and made aware of the colonists’ predicament this past summer) when the King of England felt compelled to traverse “The Pond” that separates us, visit our “Great Commanding Theater” (as Thomas Jefferson described Congress), to refresh our memories why we once chose war to settle the issue of governance, review our Constitution, checks and balances, laws, rules, and sacred canons.
Make no mistake, we’ve allowed ourselves to be ruled by a conman, liar and master grifter who (promising peace) has brought only suffering and economic collapse to an already troubled world. Trump incited an armed mob to attack our Capitol (and kill its defenders if necessary) to overturn an election he knew he’d lost. He then wrongly pardoned 1,600 insurrectionists. This president has been convicted of more crimes than the vast majority of the people he’s deported.
The United States is the undisputed epicenter of a chaotic and shattered society of nations. We have never looked weaker, more ridiculous, incompetent and untrustworthy, to allies and adversaries alike, around the world, than we do right now.
Consequently, a new world order has emerged and we’re not in it. To our allies our credibility no longer exists. This Administration has tossed that overboard along with our dignity, our integrity, and the last vestiges of our moral conscience.
To the rest of the world we appear a seriously flawed society with the intellectual characteristics akin to and paired with the moral virtues and integrity of a fur ball.
Through it all, even as Trump purges the experienced and knowledgeable leadership from our institutions, from the Department of Homeland Security to the Pentagon, the veteran community remains deafeningly silent, seemingly willing to be complicit in this Administration’s wrongdoings.
However, one USAF Major (Jason Watson) carried out what the U.S. Congress (together with veterans organizations: The American Legion, VFW and others) should have. Major Watson stood on the Capitol steps (in uniform), knowing full well he might sacrifice both his career and his freedom, and demanded President Trump be impeached, held accountable for his crimes against the Constitution, violations of U.S. and International laws, and be removed from office. One man regarded his oath as sacred and acted on it.
Americans must understand, there can be no justice in a nation where men like Trump are allowed to flourish. Does this once principled and prosperous nation not have a sufficient number of men and women of courage and enough soul left to say: “No More – Enough???”
David L. Snell
Franklin, N.C.
David:
Having experienced life in the enlisted ranks of Uncle Sam’s army, during a time when relations with officers were as fractious as they get, we are hardly accustomed to heaping praise on military officers. That said, in our view, Major Watson truly is a hero.
The Editor
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Throw the Bums Out
Dear Editor,
Are Republicans fixing or causing waste, fraud, and abuse?
WASTE – Republicans support the pointless war with Iran that wasted most of our best missiles and critical munitions, along with $40 billion and nearly 1,000 Americans injured or killed. For what? To open the Strait that was open before the war?
FRAUD – Republicans condone trump’s open acceptance of bribes and gifts in exchange for government policies and pardons. It’s flat-out corruption. Setting loose convicted fraudsters doesn’t help America. America is weaker because trump allowed Qatar to buy our best, classified AI chips after giving him a jet. Qatar doesn’t develop AI; but they do sell stuff to our adversaries.
ABUSE – More law-abiding people are imprisoned here than in any other country. Undocumented immigrants who have been living here for years with no problem are now being abused in Republican-funded prisons.
It’s time to kick out the corrupt bums.
Bruce Joffe
Piedmont, Calif.
Bruce:
Hear, hear. Of course, in our book, it’s always a good time to throw the bums out.
The Editor
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This Is Blowback
Dear Sir:
In a recent letter to Seacoastonline, the author claimed that the current war with Iran began 45 years ago. Actually, the current problem with Iran began over 70 years ago. In August, 1953, the CIA orchestrated a coup known as Operation Ajax, to overthrow Iran’s democratically-elected Prime Minister Mohammad Mosaddegh. The U.S. then installed Mohammad Reza Pahlavi, The Shah as its leader.
The Shah ruled as a dictator until he was overthrown by the Islamic Revolution in 1979. The Shah used his secret police SAVAK to crush political dissent, jail opponents and restrict freedom. The brutality of the Shah’s dictatorship led to the Islamic Revolution and the current system in Iran.
It was the U.S. that started the problem with Iran in 1953, not the Iranian Government. If we had not overthrown the democratically elected government in 1953, there may never have been an Islamic Revolution and the problem we have faced since 1979.
Rich DiPentima
Portsmouth, N.H.
Rich:
The 1953 coup in Iran was just one of many, many examples of U.S. meddling. Chalmers Johnson wrote three excellent books on them, starting with Blowback: The Costs and Consequences of American Empire, in 2000. The term “blowback,” he wrote, “does not just mean retaliation for things our government has done to and in foreign countries. It refers to retaliation for the numerous illegal operations we have carried out abroad that were kept totally secret from the American public. This means that when the retaliation comes—as it did so spectacularly on September 11, 2001—the American public is unable to put the events in context. So they tend to support acts intended to lash out against the perpetrators, thereby most commonly preparing the ground for yet another cycle of blowback.”
The Editor
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On Disparities in Tax Enforcement
To the Editor:
We always hear that Republicans are the party of fiscal responsibility. Presently the Republicans control all levers of government: the executive, the house, and the senate, as well as the supreme court. Recently, DOGE made deep cuts in a wide array of government programs ostensibly to save huge amounts of money. How then, one might ask, is the U.S. debt now greater than the whole U.S. economy for the first time since WW II?
In fact, the Republicans only allege fiscal responsibility when they cut programs that benefit all Americans so they can spend more on failing foreign adventures and immigration police. Republicans claim Democrats spend foolishly on social programs due to fraud, waste and abuse.
Not only are the Republicans fiscally irresponsible when it comes to spending, they claim when they cut taxes for the wealthy they will bring in increased revenue. The theory behind this is disproved each time Republicans have instituted huge tax cuts for the rich and the resulting revenues did not increase substantially.
In order to better please their richest donors, Republicans have cut those IRS workers trained in collecting taxes from the richest taxpayers who engage in elaborate, often illegal, schemes to avoid taxes. IRS workers are encouraged to concentrate on taxpayers in the working class.
It’s time we abandon the myth that Republicans are fiscally responsible. We must face the fact that their assertions of fiscal responsibility are made only to hide their real purpose—to institute policies that favor the well-heeled.
Lorraine L. Hansen
Rollinsford, N.H.
Lorraine:
If the rich won’t let us tax ’em, we’re just gonna have to eat ’em.
The Editor
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Time for Medicare for All
To Editor:
Nancy J. Altman’s book The Road to Medicare for All: A Call to Action explains what is wrong with the U.S. medical delivery system, and champions Medicare For All. Every opportunity to get the message out should be welcomed.
Some health care advocates regard U.S. Medicare as a path to Medicare For All. But is it an Obama tar baby instead?
Current Medicare is actually a roadblock, as it provides aid and comfort to the enemies of Medicare For All. Insurance, Pharmaceutical, and HMO industries (IPH for short), are content with the current system, because it increases their bottom line. They can focus less on elders 65 and over, statistically the most expensive medical period of life. IPH can take full advantage of those younger, who have fewer health problems. Elder care can be billed to the government, which our taxes support. Also, Medicare is compromised by co-pays and exclusions, requiring payment directly from the elderly to the IPH anyway.
This IPH triple threat to our physical and financial health is well funded so they can buy enough politicians and propaganda to keep the status quo.
An informed electorate may finally wrest government from bribery and control of the IPH and other monopolies and call them to account. Altman’s book could help, but many knowing the difference between “Some Medicare For Some” and complete “Medicare For All” must become more active, as her book recommends.
David Ecklein
Rumney, N.H.
David:
We found this critique of “current Medicare” confusing, and the reference to “an Obama tar baby” both baffling and offensive. On about the third reading, though, we concluded that you are, in fact, trying to support Medicare for All. We are, too.
The Editor
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He Is On the Ballot
Dear Editor:
Donald Trump has told voters to “pretend I’m on the ballot” when they vote in the midterm elections. There is no need to “pretend,” because in effect a vote for any Republican is a vote for Trump and all his failed policies, corruption, disturbing behavior, and the destruction of our democracy.
In New Hampshire, a vote for Ayotte, Sununu, DeLorenzo, Williams, Stevens or any Republican running for State Representative or Senator would tell them that you support Mr. Trump and for them to continue to support his policies.
While I suspect that some Republicans will try to distance themselves from Mr. Trump the reality is that, once elected, they will follow his orders for fear of retribution. With regard to federal offices, voting for Republicans will help them retain control of Congress. With that control Republicans will continue to prevent Congressional oversight of the Executive and allow the Senate to confirm more extreme judges.
If Americans have any hope of restoring our democracy, placing limits on Trump’s behavior and finally getting the Epstein files released, we need to end Republicans’ control of Congress and our State House. To do otherwise would be a disaster.
Rich DiPentima
Portsmouth, N.H.
Rich:
Remember when straight ticket voting was a thing? Long frowned upon by good government-types—Goo-goos, they were called—that practice seems to have vanished along with portly ward-heelers, spats and spittoons. These days it doesn’t look so bad.
The Editor
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Social Security, Medicare, and Debt
To the editors:
We hear more and more concern about the national debt these days. This always seems to include politicians who insist that cutting social programs is the only way to solve the problem. But I find that among voters, there is little understanding about how Social Security and Medicare affect the national debt.
When the payroll taxes that are explicitly collected for Social Security and Medicare exceeds the amount needed to pay benefits, the surplus goes into the respective Trust Funds which convert those tax dollars to Treasury Securities, thereby increasing the national debt.
And when the amount collected is not sufficient to pay benefits, the Trust Funds cash in some of their Treasury Securities, thereby forcing the government to use other tax revenues, revenues not collected explicitly for Social Security and Medicare, to pay for benefits.
Finally, interest is paid to ALL holders of Treasury Securities, not just the Social Security and Medicare Trust Funds.
That surplus payroll Social Security and Medicare funds increase the national debt; that a shortfall of Social Security and Medicare payroll funds uses other tax revenues to pay benefits; and that tax revenues are used to pay the interest on Treasury Securities held by ALL the many and various holders of Treasury Securities—these are what form the basis of the three main complaints we keep hearing from politicians, who express concern but cannot agree on a solution.
What to do?
First of all, the interest that is due periodically to ALL holders of Treasury Securities, must be paid, or else the United States defaults on its debt, certainly collapsing the world-wide financial system. That should be considered unacceptable. The threat that this might happen has already damaged our bond rating, resulting in higher interest rates. If we truly wished to reduce the amount of taxes used to pay the interest on the national debt, we would have to collect more than we spend and use that surplus to buy back Treasury Securities thereby reducing the national debt.
But for the Social Security and Medicare Trust Funds, we could avoid or greatly minimize the shortages and surpluses of payroll taxes collected for these programs, by adjusting the rate or the cap periodically—not a “one-and-done” adjustment. These programs would then have little effect on the national debt and would make them sustainable and more reliable for recipients of the benefits. And it would answer the criticisms of the politicians who would target cutting these social programs as solutions for the national debt. The national debt is certainly a big problem, but eliminating, severely cutting, or “privatizing” Social Security and/or Medicaid, won’t “fix” the problem.
Paul Cully
Dover, N.H.
Paul:
If you make less than $185,500 a year, you pay the FICA tax on every dollar.
What if you make more than that? Hey, it’s all your money now!
What’s the rationale for this disparity? Apparently Congress thinks that only the rich deserve to have enough money to live.
The Editor
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What the Republican Congress Has Done For You
To the Editor:
The United States is in a real predicament: National Debt over $40T; a war with no exit strategy, showing our enemies how weak we are; a soused, incompetent Secretary of Defense who keeps firing competent generals and replacing them with yes-men; a Secretary of Health and Human Services who has caused two major epidemics, Measles and Pertussis (whooping cough) because he doesn’t believe in science.
Inflation, aided by the Republican tariffs, is driving costs of everything up. Diesel fuel, a component of all things trucked, is the highest in history and going up! Home prices, building supplies, clothing, toys, equipment, and especially food, are all way up.
But fear not. Your very own Republican congress is on the job! They will not let you down. Here’s legislation they have introduced or passed to ease your suffering.
• Rename the Kennedy Center after Trump
• Put Trump on Mt. Rushmore
• Rename the Gulf of Mexico the Gulf of America
• Rename Lake Ontario Lake America
• Make Trump’s Birthday a national holiday
• Name the Washington Metro and Dulles Airport after Trump
• Put Trump’s face on the $100 bill
• Steal taxpayer $ for his $900M Ballroom and pointy Trump arch
This Republican congress has done nothing on education, healthcare, veterans affairs, seniors, children, or rising prices. They have been out of session 56 percent of the time!
This is not a do-nothing congress, this is a suck-up congress. Throw them out!
Michael Frandzel
Portsmouth, N.H.