When does borrowing not create debt? Only in two instances: when one has no intention of paying it back, and when Barack Obama does it. Jake Tapper asked new White House press secretary Jay Carney exactly how borrowing over six hundred billion dollars in the best year of Obama’s ten-year budget projections (using the rosiest of all possible economic assumptions) somehow qualifies as (a) balanced spending and (b) not adding to the national debt. Carney explains how that works:
TAPPER: If I borrow money from you — to pay — to pay off the interest for –
CARNEY: You may owe me.
TAPPER: Ten-year rule. If I borrow money from you to pay off the interest for the debt I owe to Geoff, am I not adding to my debt?
CARNEY: Well, without dealing with hypotheticals, why don’t you — why don’t you —
TAPPER: The president seems to think that that borrowing money to pay the interest on the debt is not adding to the debt. I don’t understand that math.
Neither does anyone else — not even Carney, who then launches into a soliloquy about families, credit cards, and “invest[ing] in the future.” Carney also states that “interest payments are a major portion of our long-term debt,” but that’s not entirely true of the deficits, at least. Net interest on the existing debt will cost us $205 billion in 2011, and $240 billion in 2012. If debt interest was our only problem, it would be very controllable, and we wouldn’t need to keep borrowing to cover it.
Bear in mind that this interest reflects all the debt we have incurred up until the White House proposed its FY2011 budget. However, thanks to the massive spending expansion of the Democratic Congress and White House, interest payments start escalating rather quickly. By 2017, the interest hits $661 billion in Obama’s original budget plans; by 2021, it’s $928 billion a year. That is more than four times what interest was in 2010.
But to Carney, the problem is all in the past, not the present or Obama’s vision of the future:
Well, the debt is — has been created over a number of years, as you know. And we came in here with an economic crisis, the likes of which, I daresay, I think nobody in this room has ever seen, and which threatened to head straight into a depression if we didn’t act.
But I also remind you that we inherited, when this administration came into office, this president came into office, an enormous debt that had been piled up in the previous eight years. And that is part of the problem. And the interest that you’re talking about is on that debt as well.
Had we stopped deficit spending in 2007 when Democrats took control of the budgeting process, we would have a flat interest problem and no real fiscal crisis, just a hangover from previous deficit spending. Instead, Democrats — first with Obama in their ranks, and then at the lead — exploded the budget and put us on the fast track to Greece.
To answer Tapper’s question, borrowing to pay interest does add to debt. It’s unsustainable, no matter how many cliches Jay Carney uses to distract from the obvious.