Research

At a Cabinet meeting today, President Obama said that “we cannot sit back and be satisfied” with unemployment now at double digits. We now know that his prescribed $787 billion cure from February has not solved the root cause of our economic downturn, so Obama is turning to his usual tricks: talking about doing something instead of actually doing something.

What’s more important is what wasn’t talked about at the White House: what The New York Times called a chilling “trifecta” of problems the U.S. faces concerning our looming debt:

[A] mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

By 2019, the U.S. could be paying $700 billion a year just in interest on our debt, compared to the $202 billion in interest we’ll be paying this year. The U.S. is also facing likely increases in interest rates, which is particularly troubling considering that even a small increase of one percentage point could cost the U.S. $80 billion a year.  Lastly, the Treasury will need to refinance short-term borrowings with 10-year and 30-year Treasury securities, which have higher interest rates. On this last issue, The New York Times notes:

[T]he government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

So after passing a failed $787 billion economic stimulus that has failed to curb double digit unemployment, adding to a record $1.4 trillion deficit this year, and passing a budget that will add over $9 trillion to the deficit over the next ten years, will Obama have a plan or will it just be more talk?