WASHINGTON, D.C.–The new chairperson of the Federal Reserve, Janet Yellen, got questioned by Miss. Sen. Roger Wicker (R) at a budget committee hearing Thursday. The answer was ominous, but not unexpected.
Wicker’s biggest question had to do with how much debt you and your children will be left with.
“We have a national debt of $17 trillion,” said Wicker. “With regard to foreign debt, some 70 percent of it is held by governments, and 30 percent is attributed to private foreign investors. In total, China holds $1.3 trillion of our debt and Japan at $1.2 trillion. Do you worry about the $17 trillion debt? Should we be concerned with the fact that the Chinese and Japanese own so much of this debt?”
“I worry about the long-term path of the debt and whether or not it is sustainable,” responded Yellen.
Wicker said that if interest rates rise as most expect, then payments on the national debt could double in the next ten years from $227 billion in FY2014 to more than $500 billion.
“(Payments) would certainly go up,” agreed Yellen.
It was the second time this week that Wicker and Yellen have discussed economic and fiscal policy. During a Joint Economic Committee hearing yesterday, Wicker questioned Yellen about the Federal Reserve’s asset purchase program and whether policies by the Central Bank and Obama Administration have contributed to income inequality.