For the past few months on Spend Matters and affiliate Spend Matters blog Metal Miner, we've been relatively harsh critics of much of the Obama "stimulus package" both because so little of it is stimulus (and the amount that is has barely made it into the economy) and because of the massive amount of debt we're running up as a result -- which will almost surely lead to unprecedented inflation (commodities and currency) at some point in the future. Now, even the architect of the plan himself appears to be concerned. A recent Bloomberg wire article suggests that President Obama does not believe current spending levels are sustainable. The story quotes Obama calling deficit spending "unsustainable" and warns of "skyrocketing interest rates ... if the U.S. continues to finance government by borrowing from other countries". He also suggests that "we can't keep on just borrowing from China".
For the sake of the world economy in the next decade and beyond, let's hope President Obama follows his own spending sermon and gets some cost reduction religion. Alas, it appears this is one President whose rhetoric about the impacts of such massive spending while on the bully pulpit are not carrying over to actual policy. "Two weeks ago, the President proposed $17 billion in budget cuts ... Republicans ridiculed the amount, saying that it represented one-half of 1 percent of the entire budget", the Bloomberg dispatch notes. While I suppose we'll need to start somewhere and $17 billion in cuts is better than nothing, metaphorically this represents a down payment of about two dollars on a new $20,000 car when the dealer requires $2,000. Yet we continue to walk out of the showroom with a shiny new car every year without putting any more down (or paying off any more of the principal on the debt).