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Tuesday, February 7, 2012

President Obama and the National Debt

In both its news article ("Obama Makes Populist Pitch") and its editorial ("The State of His Policies") about President Obama's State of the Union speech, the Wall Street Journal omitted two revealing errors in the text of his speech. The president said, "Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home." Later in the speech he said, "Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else –- like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both."
But a government that is running deficits cannot pay down the debt. All deficits - large or small - increase the national debt. The only way the federal government can pay down the debt is to generate an annual surplus and use some or all of the surplus to reduce the debt. President Obama has never proposed and never will propose a surplus budget. His 2011 budget plan showed annual deficits and therefore annual increases in the national debt each year from 2012 to 2021. Does the president believe lower deficits will reduce the debt? If so, he needs a primer on the national debt.