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Another Jewel On Obama’s Debt Crown

- January 4, 2012

Obama’s Binge Spending Pushes The United States’ Debt Past Another Grim Milestone As It Surpasses 100 Percent Of GDP

At $15.22 Trillion, The National Debt Has Officially Surpassed 100 Percent Of GDP. (Treasury Direct, Accessed 1/3/12; Bureau Of Economic Analysis, Accessed 1/3/12)

THE AMOUNT OF THE GOVERNMENT’S DEBT IS NOW WELL BEYOND THE POINT WHERE ECONOMISTS BELIEVE IT CONSTRAINS ECONOMIC GROWTH

Economists Carmen Reinhart And Kenneth Rogoff Found Debt In Excess Of 90 Percent Of GDP Can Cut Growth Rates In Half. “When gross external debt reaches 60 percent of GDP, annual growth declines by about two percent; for levels of external debt in excess of 90 percent of GDP, growth rates are roughly cut in half.” (Carmen M. Reinhart and Kenneth S. Rogoff, “Growth In A Time Of Debt,” American Economic Review, May 2010)

  • Economists At The Bank Of International Settlements Concluded That Debt Beyond As Much As 80 Percent Of GDP Could Thwart Economic Growth. “Its authors—a trio of economists from the Bank for International Settlements—demonstrate that when government debt reaches beyond a certain threshold it begins to sap growth from the economy. Government debt beyond a threshold ranging from 80 to 100 percent of gross domestic product (GDP) begins to thwart growth.” (John Carney, “From Jackson Hole: A Defense Of The Debt Ceiling,” CNBC, 8/29/11)

The Government Is In A Debt Trap That Could Be Fueling The Recession. “Our recession may be driven, at this point, by the balance sheet of the government. Repairing that balance sheet by lowering spending may be the only way out of the debt trap. Call it the New Paradox of Thrift: the government can stimulate growth only by refusing to borrow. We need thrift all the way down.” (John Carney, “From Jackson Hole: A Defense Of The Debt Ceiling,” CNBC, 8/29/11)

  • CBO Director Douglas Elmendorf: Growing Debt Increases Risk Of “Sudden Fiscal Crisis.” “Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates.” (Douglas Elmendorf, “CBO’s 2011 Long-Term Budget Outlook,” Congressional Budget Office “Director’s Blog”, 6/22/11)
  •  “Public-Sector Debt In The U.S. Grew From 58 Percent Of GDP In 2000 To 97 Percent In 2010. That Almost Certainly Puts Us Beyond The Threshold Where Our Debt Is Restraining Economic Growth.” (John Carney, “From Jackson Hole: A Defense Of The Debt Ceiling,” CNBC, 8/29/11)
  • CNBC’s John Carney: This “Badly Undermines The Keynesian Case” For More Deficit Spending Since It Could Lead To Lower Growth. “This has serious implications for economic theory. It badly undermines the Keynesian case—made by the like of Paul Krugman—for having government spending and borrowing increase to ameliorate the downturn. It implies that more spending—at least when financed by debt—will lead to lower growth rather than higher growth.” (John Carney, “From Jackson Hole: A Defense Of The Debt Ceiling,” CNBC, 8/29/11)

OBAMA ACKNOWLEDGED THAT IF WE FAIL TO CONTROL OUR DEBT IT COULD LEAD TO A DOUBLE-DIP RECESSION

Obama Believed That A Failure To Control The Deficit Would “Make It Harder For The Economy To Grow.” “Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity.”  (Hans Nichols, “Obama Plans To Reduce Budget Deficit To $533 Billion By 2013,” Bloomberg, 2/21/09)

  • Obama Recognized That If We Failed To Control Our Debt It Could Lead To A Double-Dip Recession. OBAMA: “It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.” (Fox News, “Interview With Major Garrett,” 11/18/09)
  • See The Video Here

Yet Obama Shows No Signs Of Attempting To Give Up His Crown As The “Undisputed Debt King Of The Last Five Presidents”

Politifact: “Obama Is The Undisputed Debt King Of The Last Five Presidents.” “So by this measurement -- potentially a more important one -- Obama is the undisputed debt king of the last five presidents, rather than the guy who added a piddling amount to the debt, as Pelosi’s chart suggested.” (“Nancy Pelosi Posts Questionable Chart On Debt Accumulation By Barack Obama, Predecessors,” Politifact, 5/19/11)

“By The Time The Next Election Rolls Around, The Government Will Have Taken On Almost $7 Trillion In Debt Under Obama. It’s Hard To Explain Away A Number So Big.” “For that reason alone, it is unimaginable that debt doesn’t become an even bigger issue in the presidential election. The size-of-government spat is a hard one for the president to win. By the time the next election rolls around, the government will have taken on almost $7 trillion in debt under Obama. It’s hard to explain away a number so big.” (Jim VandeHei and Mike Allen, “President Obama’s Big Drags,” Politico, 8/4/11)

  • By The Next Election Obama Will Have Added “$22,500 In New Debt For Every Man, Woman And Child In The Nation.” (Jim VandeHei and Mike Allen, “President Obama’s Big Drags,” Politico, 8/4/11)

Obama’s FY 2012 Budget Proposal Would Cause TheNational Debt To Rise To $24.0 Trillion By 2021. (“Fiscal Year 2012 Mid-Session Review,” Office Of Management And Budget, 9/1/11)

  • Obama Is Responsible For “The Most Rapid Increase In The Debt Under Any U.S. President.” “The latest posting by the Treasury Department shows the national debt has now increased $4 trillion on President Obama's watch. The debt was $10.626 trillion on the day Mr. Obama took office. The latest calculation from Treasury shows the debt has now hit $14.639 trillion. It's the most rapid increase in the debt under any U.S. president.” (Mark Knoller, “National Debt Has Increased $4 Trillion Under Obama,” CBS News, 8/22/11)
  • Congressional Budget Office: “The Amount Of Federal Debt Held By The Public Has Skyrocketed In The Past Few Years …” “The amount of federal debt held by the public has skyrocketed in the past few years, rising from 40 percent of GDP at the end of 2008 to reach an estimated 67 percent by the end of this year.” (“The Budget And Economic Outlook: An Update,” Congressional Budget Office, 8/24/11)

OBAMA BROKE HIS PROMISE TO GET SERIOUS ABOUT 
CONTROLLING THE NATION’S DEFICIT

PROMISE: Obama Pledged To Cut The Deficit In Half By The End Of His First Term. OBAMA: “And that's why today I'm pledging to cut the deficit we inherited by half by the end of my first term in office.” (President Barack Obama, Remarks At The Fiscal Responsibility Summit, Washington, D.C., 2/23/09)

  • “President Barack Obama Plans To Cut The U.S. Budget Deficit To $533 Billion By The End Of His First Term …” (Hans Nichols, “Obama Plans To Reduce Budget Deficit To $533 Billion By 2013,” Bloomberg, 2/21/09)
  • One White House Official Told Politico “We’ll Cut It At Least In Half.” “Under White House projections, this year’s inherited budget deficit of $1.3 trillion will be cut to $533 billion by fiscal year 2013, the end of the first term. ‘So we’ll cut it at least in half,’ the official said.” (Mike Allen, “Obama Vows To Cut Huge Deficit In Half,”Politico, 2/22/09)

FAIL: Even If Every Part Of Obama’s Deficit Reduction Proposal Was Enacted, The Deficit At The End Of His First Term Would Still Be $1.33 Trillion, Over Double What He Promised. (“The President’s Plan For Economic Growth And Deficit Reduction; Table S-3,” Office Of Management And Budget, 9/19/11)

  • Politifact: “Obama Made A Pledge To Cut The Deficit In Half By The End Of His First Term. And He’s Falling Short So Far.” (Gregory Trotter, “Tim Pawlenty Says President Obama Is Going To Break Promise On Deficit And Will Double It,” Politifact, 6/10/11)
  • Treasury Secretary Timothy Geithner Said Even If Congress Enacted The President’s Budget “We Would Still Be Left With A Very Large Interest Burden And Unsustainable Obligations Over Time.” (Treasury Secretary Timothy Geithner, Remarks Before Senate Budget Committee, Washington, D.C., 2/17/11)

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