Doing the math on Obama's debt

How much is a trillion dollars? Mathematically it would be expressed with this simple equation: A trillion dollars = $1,000,000,000,000.

It takes 12 zeroes to the left of the decimal point to make a trillion. Or, in other words, a trillion is a million million dollars.

The website 100777.com expressed it this way: "The U.S. government spends more than the entire Gross Domestic Product (GDP) of Australia, China and Spain combined. If you laid one-dollar bills end to end, you could make a chain that stretches from earth to the moon and back again 200 times before you ran out of dollar bills! One trillion dollars would stretch nearly from the earth to the sun. It would take a military jet flying at the speed of sound, reeling out a roll of dollar bills behind it, 14 years before it reeled out one trillion dollar bills."

We find it hard to wrap our minds around such a large number. Barack Obama doesn't share this affliction. He is pushing the U.S. Senate to raise the U.S. debt ceiling beyond $12.1 trillion. This year's deficit alone is set to surpass $1.8 trillion.

Just four months ago, on May 14, 2009, Barack Obama warned, "We can't keep on just borrowing from China, we have to pay interest on that debt, and that means we are mortgaging our children's future with more and more debt." He went so far as to say the budget deficit is "unsustainable," that day in Rio Rancho, N.M.

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Last year at this time he was criticizing President Bush's deficits. And Bush was wrong to expand the federal budget by a then-historic $700 billion, but his deficits are small potatoes now. According to the Obama administrations own numbers, from 2010 to 2019, annual deficits will total $7.1 trillion; that's on top of the $1.8 trillion in 2009.

The debt ratios look terrible. The ratio of federal debt to gross domestic product (GDP, or the entire output of America's goods and services) would reach 70 percent, up from 41 percent in 2008. These are the worst figures in over 60 years (80 percent). Sixty years ago we were dealing with the debt accumulated fighting Hitler and Japan in World War II.

So if Barack Obama really means what he said on May 14 about the deficit, why does he keep proposing new spending? The answer is politics has trumped his own good sense.

The greatest difference between Obama and conservatives is on the question of ownership of our economy's resources and money. Conservatives believe that to stimulate the economy, you lower taxes and allow businesses and individuals to make decisions about how any money should be used. Obama believes the elites who control government should make the decisions about how the money should be used.

Therefore, rather than stimulate the economy with across-the-board tax cuts, as Reagan did in the early 1980s or George W Bush did after the post-Sept. 11, 2001, recession, Obama has chosen increased government spending as his favorite tool to revive the economy. Problem is, it doesn't work.

Nobel laureate and economist James Buchanan told the London Telegraph this week, "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."

Buchanan's prescription is to do the exact opposite of Obama. He would restrain spending while the economy heals.

Ironically, Obama just can't change his habits, so he is also proposing universal health care, which will cost no less that $900 billion and likely much more. He also wants new regulations to protect us from global warming called the "cap and trade" bill, which will cost tax revenue by decreasing the GDP.

Professor Anthony East summarized the problem in Human Events: "So, by 2020, some economists estimate that the federal debt will reach over $30 trillion. At 4 percent per year interest, that's $1.2 trillion annually. Or, 41 percent of the 2008 federal budget. Gosh, these numbers are breathtaking. Just to pay the interest – not the principal even – on the national debt would mean that the government would have to eliminate the entire budgets for the U.S. military and Social Security. No more guns or butter."

Floyd and Mary Beth Brown are columnists and best-selling authors. Floyd is president of the Western Center for Journalism. An archive of their writings is available at www.floydbrown.com.