President Obama presented his annual budget proposal recently, which contains $3.7 trillion in spending. Of that amount, $1.6 trillion is unfunded. This means it is going on Uncle Sam’s credit card. The problem with that is the credit card, also known as the national debt, already has a balance of $14 trillion.
Economic experts across the country are expressing alarm that our national debt is growing as a percentage of gross domestic product (GDP) to dangerously high levels. That percentage was about 55% of GDP at the beginning of George Bush’s term. And while it certainly grew during his presidency and Republican’s control of Congress until 2006, the national debt was still only 65% of GDP when the Democrats took over Congress in 2007. Now, after just one year of full Democratic control of the White House and Congress, our national debt is predicted to near 100% of GDP in 2010.
And who is financing this overspending by the American federal government? Well, about half of the debt is held by the government itself. But the fastest growing segment of the debt financing is foreign investors, which now makes up over 25% of the national debt. And who is the largest foreign investor? You guessed it: China. I don’t need to tell you that China and the USA have more than a few differing perspectives on issues of the day. So it is no surprise when China gets testy about American activities. It’s sort of like when you convinced your rich uncle to loan you some money, but then he objects to your lifestyle. It wouldn’t take much for our national debt to become a significant factor in our national security.
The USA needs to reduce its spending, reduce its debt and reduce its dependence on foreign investors. We are getting way too far out on a limb.
