Research

“"Unlike Congress, we don't get to borrow from the Chinese," Florida State Senator J.D. Alexander said yesterday in his explanation of the tough choices legislators in the Sunshine State have to make in that state’s forthcoming budget.  And while he is right about Congress, this morning’s Wall Street Journal makes clear that the cost of borrowing time and money from the Chinese is going up.  The government had trouble selling our debt to finance President Obama and the Democrat Congress’ binge spending this week because demand, especially from foreign investors, was weak. 

One economist noted that the low demand for treasuries is because investors are worried about the high deficits we are facing now:

While this could be just ‘noise’ in the markets, ‘I think it involves a greater, long-term concern about deficits in the U.S. last 10 or 20 years, about Social Security being in a deficit,’ said Brian Fabbri, chief economist North America at BNP Paribas. ‘And all of the concerns about the U.S. have been heightened by concerns about Greece.’

If this trend continues the interest rates we have to pay our debt will have to be raised, making Obama’s binge spending even more expensive.  We previously highlighted the fact that if we lose our AAA credit rating as a result of Obama’s binge spending interest rates could go up as investors start to see the U.S. as a risky investment, but it looks like that fear is starting to be realized even with our credit rating intact.

Unfortunately, the Obama administration isn’t doing anything to fix this problem.  After looking at Obama’s 2011 budget, CBO said yesterday that the ten year deficit will total $9.75 trillion, $1.2 trillion more than Obama predicted in his budget.  Even more frightening is the fact that by 2020 our debt will equal 90 percent of GDP.  

Obama has been spending without any regard for how his actions hurt our economy, and House Speaker Nancy Pelosi has been aiding and abetting this binge. Just another reason to fire her this November.