Speaking to a town hall in Rio Rancho, New Mexico, yesterday, President Barack Obama said:
We can’t keep on just borrowing from China, or borrowing from other countries because part of it is, we have to pay for — we have to pay interest on that debt. And that means that we’re mortgaging our children’s future with more and more debt, but what’s also true is that at some point they’re just going to get tired of buying our debt. And when that happens, we will really have to raise interest rates to be able to borrow, and that will raise interest rates for everybody — on your auto loan, on your mortgage, on — so it will have a dampening effect on the economy.
It is encouraging to know that parts of President Obama’s mind understand that our record levels of government spending are unsustainable. But it is also troubling that President Obama refuses to contemplate how his own policies are making the situation much much worse. His entire $787 billion economic stimulus package is borrowed money. And his budget adds $4.9 trillion in public debt from the beginning of 2010 through 2016.
And the higher interest rates that President Obama correctly identifies as the cost of runaway deficit spedning are not as far off as he hopes. As we reported last week:
The U.S. Treasury auction of long-term bonds on Thursday was “terrible”, in the words of one Wall Street economist, with the rate on the 30 year bond jumping from 4.1 to 4.3 percent. This is just the first sign that the debt-based Obama economic stimulus plan is about to become a major drag on the recovery, just as expected.
