Satisfying the crowds in a Rio Rancho, New Mexico, town-hall meeting today he said, "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."
No one will disagree with the obvious statement, but the obvious answer -- to stop borrowing -- is a bit tougher. The U.S. is not a position to do that with the current economic crisis. While Obama talked about raising taxes on the wealthy, he certainly can't touch that issue during the current recession. The last thing he wants to do is risk slowing down what little economic activity does exist.
But Obama's attempts at finding budget cuts haven't been very successful so far. The only details we've seen about cutting the federal budget were his plans to eliminate or reduce 121 programs for a total savings of $17 billion. As Republicans accurately point out, when you couple that with an $81 billion increase in spending, the $17 billion looks like a joke.
But even more important than that political squabbling are the rising health care costs that are busting the budget. With government guarantees to Medicare and Medicaid, trillions of dollars will need to be spent. If a comprehensive health care bill does pass, that could be a real start toward fixing the growing debt problem.
Right now about 84 percent of the federal budget is for entitlements, defense, homeland security or interest on the debt. If Obama really wants to have an impact on getting control of deficits, he must look closely at all these areas for cuts. You can't fix the problem just focusing on the 16 percent in discretionary spending. Yet that's all Congress has done recently.
I'll believe Obama is serious about fixing deficit spending when he starts to tackle entitlements, defense spending and homeland security spending. Surely there's waste in those parts of the budget.
Lita Epstein has written more than 25 books including "Reading Financial Reports for Dummies."
