When the Treasury Department is repaid the money it lent, shouldn’t that be used to pay down the national debt?
Question/Comment: When the day comes that the banks and other financial institutions start to repay the vast amounts of money that have been borrowed by the Treasury Department, shouldn’t that money be used to pay down the additional national debt that was created? Past experience says that Congress will spend the additional funds, considering it as revenue.
Paul Solman: Well, David, the money WILL be used for that purpose – implicitly. The more the Treasury gets – in taxes or any other revenues – the less it has to borrow. The national debt is simply the sum total of all Treasury borrowing.