If Russia can pay its debt off, why can't the US?

Reborn Russia clears Soviet debt, By Edmund Conway, Economics Editor

The Russian Federation has paid back its entire Soviet-era debt to the Paris Club. It used to owe approximately $60 billion when communism fell, and Russia took on all of the foreign debt owed by former members of the USSR (how sweet of them!).

The paid off debt is clearly a sign of the country's financial independence. Of course, it is contributed by large amounts of revenues that have been taken in by high oil and gas prices.

It is quite a turnaround for this "lesser" superpower. Eight years ago, it suffered a financial crisis when it could not pay its debt payments on $40 billion of domestic debt, sparking a run on the ruble currency and plunging thousands of its citizens into poverty.

Today, it is projecting a budget surplus of $56 billion next year. Of course, the US is projecting a $260 billion budget deficit for this year. Russia is also the world's third-largest reserve of foreign currencies holding $277 billion. China ($941 billion) and Japan ($864 billion) are the only two countries that are higher. (Source: Wikipedia) The US only has about $67 billion in foreign reserves.

By paying off the debt, Russia will save more than $12 billion in interest over the next 14 years. In reverse, the US had to pay $352 billion in interest payments for 2005, and it has already paid $360 billion for 2006 (Source: Dept of Treasury)

Now, I do not know if comparing Russia with the US is a good example. But really, compare the financial responsiblity. Who's better?