Moneybox: Borrow. Borrow. And Borrow Some More.

Now playing: Slate V, a video-only site from the world's leading online magazine. Visit Slate V at www.slatev.com.
Moneybox Borrow. Borrow. And Borrow Some More. The Republican and Democrats both have dumb plans to fund the payroll tax cut. This is what they should do instead. By Matthew Yglesias Posted Monday, Dec 05, 2011, at 08:39 PM ET On occasion when I feel like getting upset at someone, I scroll over to the website of the U.S. Treasury Department and check its Daily Real Yield Curve page. This vital economic resource is obscure to the average American, which is understandable, but also apparently unknown to the president of the United States and members of Congress of both parties. It says something, after all, that's slightly shocking. As of Dec. 2, the inflation-adjusted interest rate financial markets are charging the federal government for a five-year loan is negative. For a seven-year loan? Negative. For a 10-year loan? Zero. In other words, investors are currently willing to lend the U.S. government money, and then in return get back less money (in inflation-adjusted returns) five or seven years later. At 10 years, we'd be repaying exactly what we put in. Consider this as you look at the congressional fight about how to pay for an extension of temporary payroll tax cuts that both parties in principle agree should be extended. Republicans want to pay for the extension with reductions in government spending, holding the short-term needs of the fragile labor market hostage to their larger ideological agenda. Democrats propose paying for the extensions with a temporary tax on incomes of over $1 million, hoping the GOP will object and thus permit the president to castigate his opponents as taxing the middle class to benefit millionaires. Democrats on the Hill and in the administration have conveyed to me ... To continue reading, click here. Join the Fray: our reader discussion forum What did you think of this article? POST A MESSAGE | READ MESSAGES Also In Slate Nancy Pelosi Hints That She Has "Thousands of Pages" of Dirt on Gingrich The Terrifying Phone Software That's Tracking Your Movements and Logging Your Keystrokes The Broncos' Stunning Victory Over the Vikings Is Shaking My Non-Belief in God	Advertisement
Manage your newsletters subscription: Unsubscribe | Forward to a Friend | Advertising Information
Ideas on how to make something better? Send an e-mail to slatenewsletter@nl.slate.com. Copyright 2011 The Slate Group | Privacy Policy The Slate Group | c/o E-mail Customer Care | 1350 Connecticut Ave NW Suite 410 | Washington, D.C. 20036