Speaking at Georgetown University on April 14th, President Barack Obama promised: “We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity — a foundation that will move us from an era of borrow and spend to one where we save and invest.”
Nice words. But the Obama administration actions have produced all sand and no rock. From the Wall Street Bailout, to Cash for Clunkers, to Obama’s failed stimulus, this administration has been all about borrowing and spending. And as the New York Times reports today, it will not be long before we begin paying a real price for these policies:
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
$700 billion a year in interest payments alone. That is more money than our entire defense budget for next year including the wars in both Iraq and Afghanistan. And that is a low end estimate. As Heritage fellow J.D. Foster has previously noted, governments around the world are also furiously borrowing, feeding a global debt bubble that will eventually force the U.S. Treasury to pay much higher interest rates. And much of the debt we took on this past year is coming due soon. The NYT reports that to take advantage of low rates today, the Treasury issued a huge amount of short-term debt. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead. The Concord Coalition’s Robert Bixby comments: “The government is on teaser rates. We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”
The American people are rightly concerned about this impending disaster. According to Rasmussen Reports, deficit reduction has remained the number one issue for voters ever since President Obama listed his four top budget priorities in a speech to Congress in February. Forty-two percent (42%) say cutting the deficit in half by the end of the president’s first term is most important, while only 24% say health care reform should be the top priority. Despite the clear wishes of the American people, the Senate voted Saturday night to move forward on a $4.9 trillion in new health care spending. The leftist majorities in Congress say that they will follow with the promised spending cuts and tax hikes to make their bill deficit neutral, but nobody believes them. According to the latest Quinnipiac University poll only 19% of Americans believe President Obama’s promise that health insurance reform will not add to our federal budget deficit over the next decade. 72% of Americans tell Quinnipiac they right understand that Obamacare will only add to our nation’s record breaking $12 trillion national debt.
There are a number of highly credible conservative plans for reducing our national debt. But Congress should take a tip from the medical profession on health reform and “first do no harm.”