(chart source here)
Such borrowing puts present and future generations at risk because sooner or later (probably sooner) we will be unable to borrow from the Chinese and other foreigners, and the result will be runaway inflation and higher interest rates.
Yet Obama plows ahead. It now is clear that Obama understands the danger, but races down the spending road nonetheless:
President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque.
“We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have dampening effect on our economy.”
The president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare and said he was confident that the House and Senate would pass health-care overhaul bills by August.
“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.
The notion that we can drive down health care costs enough to offset multi-trillions of dollars of spending on a variety of items (not just expanded health care coverage) is delusional. When do health care costs ever decrease when combined with expanded services?
Welcome to economic bizarro land.