1,000 euros of public debt per second

Do you know that Spanish public debt increases by about 1,000 euros per second? The current debt of the Spanish public administrations, including the autonomous communities, is 1,921,590,810,000 euros –try reading that number–. This is indeed a problem, and nobody talks about it.

Public debt does nothing but grow and, deep down, it is never paid: simply a new loan is requested to meet the payment obligations that come due. Between 2012 and 2020, financing oneself was practically free, since interest rates were close to zero. It was great. However, at what rate is the ten-year Spanish bond trading today? At 4.05%. It is the cost of the new debt that is issued nowadays.

Therefore, the State is replacing debt it contracted ten years ago at a practically zero cost with new debt that it now has to remunerate at a rate of 4.05%. A ruin in terms of debt interest. Every euro we allocate to paying interest is a euro we cannot allocate to education, healthcare, infrastructure, or reducing taxes. The problem is not only how much we owe, but what we stop doing in order to pay what we owe.

And why is debt originated? Because we live based on a deficit. Despite having a public budget, revenues are never met and expenses are always higher. As in any company, when the money does not arrive, we resort to debt. Therefore, the more deficit there is, the more debt we request and the more interest we pay. And the more interest we pay, the more deficit we generate and the more debt we need. It is an endless cycle. The difference is that, while a company cannot go into debt indefinitely without consequences, the State can refinance its debt for decades.

And how do we solve it? Debt does not disappear by decree nor is it paid with promises: it is paid with taxes, with less public spending, or with more debt.