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Wednesday, February 16, 2011 11:05:11 AM

Re: PegnVA post# 10326

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Obama says he'd stop adding to debt, but that's not true

By Steven Thomma | McClatchy Newspapers
Posted on Tuesday, February 15, 2011


WASHINGTON — President Barack Obama's claim Tuesday that his proposed budget would stop adding to the national debt is wrong — and is proved wrong in his own budget.

"We will not be adding more to the national debt," he said flatly Tuesday at a news conference. "To use a sort of an analogy that families are familiar with, we're not going to be running up the credit card anymore. That's important, and that's hard to do. But it's necessary to do."

However, his budget shows that the gross national debt would continue to rise every year under his proposal, almost doubling from $13.5 trillion last year to $26.3 trillion in fiscal 2021.

What's that mean about Obama's statement Tuesday?

"It's not true," said Robert Bixby, the director of the Concord Coalition, a nonpartisan budget watchdog group.

Obama bases his claim on the notion that his budget would bring government spending — except for interest on the national debt — in line with government revenues by fiscal 2017, reaching what he and his aides call "primary balance." That's a new bit of budget jargon designed to mask how much the debt costs the government annually.

"By the middle of this decade our annual spending will match our annual revenues," the president said Tuesday.

He overlooks the fact that the government still would have to borrow to pay interest on the debt, much of it run up on his watch. Despite achieving "primary balance" in fiscal 2017, the government would have to borrow $627 billion to pay $627 billion in interest. Interest payments would rise annually through 2021.

Debt would rise as well, according to Obama's proposed budget. Despite the budget reaching "primary balance," the total gross government debt would rise from $21.9 trillion in fiscal 2017 to $22.9 trillion in 2018, $24 trillion in 2019, $25.2 trillion in 2020 and $26.3 trillion in 2021.

In all, the debt would jump by nearly $4.5 trillion in the four years after the government supposedly would stop adding to the debt because it had achieved "primary balance" — and that's according to his own budget.

The White House Office of Management and Budget said the debt was being increased to pay for the costs of the recession and that it would stabilize when measured as a share of the economy.

"The projected increase in federal debt over the next few years is due largely to short-term factors, particularly the need to deal with this extraordinary economic situation," the White House said Tuesday in response to McClatchy's inquiry.

"Once the economy recovers, and the deficit declines toward about 3 percent of GDP, the debt-to-GDP ratio will stabilize. The first step is to stop the debt from increasing, and the president's budget accomplishes that goal."

That may be true, but it's misleading, Bixby said.

"You'd still be running a deficit. So you'd still have to borrow to pay interest. You'd still be adding to the debt. ...It's loose rhetoric. It's literally not true."


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