Federal Deficit on Pace to Reach Record $1T

In recent days, the Treasury has sold one-month bills at zero percent and three-month bills at rates near zero.

House Financial Services Committee member, Rep. Melvin Watt, D-N.C., center, questions a witness...

House Financial Services Committee member, Rep. Melvin Watt, D-N.C., center, questions a witness during a hearing on Capitol Hill in Washington, Wednesday, Dec. 10, 2008, to discuss the Troubled Assets Relief Program (TARP). Rep. Al Green, D-Texas is at left, and Rep. David Scott, D-Ga. at right. (AP Photo/Susan Walsh)

(AP)

That's because the financial meltdown has caused large institutional investors to seek out the safety of T-bills, increasing demand and lowering the yield on government debt.

But Robert Bixby, executive director of the Concord Coalition, a nonpartisan budget watchdog group, warned that the low rates won't last forever.

"This is like a teaser rate for the federal government," he said, referring to the low initial interest rates that many mortgage lenders offered to entice consumers to buy a home. Many homeowners have since struggled to pay higher rates that have kicked in after the teaser rate.

But Rosenberg thinks the U.S. can afford the extra spending, as total public debt is equal to about 40 percent of the U.S. economy, he said in a research note Tuesday.

That is "well below any level that would suggest a cause for concern about the credit rating on U.S. debt."

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Associated Press Writers Martin Crutsinger and Jim Kuhnhenn contributed to this report.

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