DOUBLING THE NATIONAL DEBT
March 25, 2009
President Obama's pledge to halve the budget deficit by 2013 is hardly ambitious. The budget deficit will quadruple in 2009 to $1.75 trillion, and cutting that level in half would still leave deficits twice as high as under President Bush. Furthermore, three expected developments -- the end of the recession, withdrawal of troops from Iraq, and phaseout of temporary stimulus spending -- would halve the budget deficit by 2013. The President's budget shows deficits averaging $600 billion even after the economy recovers and the troops return home from Iraq. That is not good enough, says Brian M. Riedl a researcher with the Heritage Foundation.
- President Bush presided over a $2.5 trillion increase in the public debt through 2008. Setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama's budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016 -- nearly double the amount accumulated under President Bush over the same number of years.
- Overall, the public debt level would double over the next decade to $15.4 trillion ($12.5 trillion in inflation-adjusted dollars).
- At 67 percent of gross domestic product (GDP), this would constitute America's largest debt burden since immediately following World War II.
In the short run, this surge of debt would increase interest rates. In the long run, Washington is dumping a colossal amount of debt into the laps of our children and grandchildren, says Riedl:
- Between 2008 and 2013, the budget will add $5.7 trillion ($48,000 per U.S. household) in new government debt.
- The annual interest on this debt would nearly equal the entire U.S. defense budget by 2019.
- Moreover, given the unsustainable costs of paying Social Security, Medicare and Medicaid benefits to 77 million retiring baby boomers, the federal debt will continue expanding after 2019.
Without real reforms, the result may be devastating tax increases for decades to come, says Riedl.
Source: Brian M. Riedl, "The Obama Budget: Spending, Taxes, and Doubling the National Debt," Heritage Foundation, Backgrounder No. 2249, March 16, 2009.
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