The national debt is skyrocketing. In 2009 publicly held debt is projected to jump to 54.8 percent of GDP, up from 40.8 percent in 2008. A year-to-year increase of this size hasn’t occurred since World War II. While the main causes of this massive increase – $787 billion economic “stimulus” and the $700 billion Troubled Asset Relief Program (TARP) – are sure to be debated for some time, the truly frightening revelation should be not what has already taken place, but what our elected officials have planned.
President Obama’s budget, if passed, would send debt to levels 26.3 percent of GDP over current law. Although President Obama has publicly stated his desire to both bring down deficits and reform entitlements under his watch, his actions don’t match his words.
As The Washington Post points out,
What is more alarming is that, barring major spending cuts or tax increases, President Obama’s budget could drive that figure to 82 percent by 2019, according to the Congressional Budget Office.”
It’s no wonder that during his recent trip to China US Treasury Secretary Tim Geithner was laughed at when he tried to persuade the Chinese that the US debt they hold was a “very safe” asset.
Rebuilding their confidence and a strong economy will require a much more credible commitment to debt reduction than we currently see from the Obama administration.