Should we really add $5 trillion more to the debt?

Yesterday, I held a press conference with other House Republican leaders to show our concern with President Obama’s budget which adds $5 trillion to the national debt over the next 5 years.  Please see my remarks below.

Last night, Steven Spruiell wrote a blog post at The Corner expanding upon my fear that trillion-dollar deficits will drive up interest rates and increase inflation to intolerable levels.

By now most of us are familiar with the term "adjustable-rate mortgage," or ARM. An ARM is a loan the interest rate on which can change over time…ARMs became wildly popular during the housing boom as borrowers took out loans with low "teaser" rates, believing that, as the value of their homes rose with the tide, they could refinance at lower fixed rates before the "real" rates on their original loans kicked in. When the tide went out, millions of borrowers were left exposed. They couldn't refinance, their rates jumped, and they couldn't afford to stay in "their" homes.

Investor Bob Wiedemer likes to say that the United States is the largest holder of adjustable-rate debt in the world — nearly 40 percent of our public debt is short-term and must be refinanced each year. After the stock market crash of late 2008, U.S. borrowing costs plummeted even as it borrowed hundreds of billions to fund the bailouts, because investors the world over viewed U.S. government securities as a "safe haven" for their money in what had become a very unsafe world for capital…But our borrowing costs won't stay low if we run trillion-plus deficits for the next three, five, ten years, as we are projected to. They will reset when we hit our credit limit. And when they rise (and they have nowhere to go but up), we could be looking at a situation where interest on the debt, which cost us $260 billion in 2008, costs us a multiple of that.

It’s a shame Democrats are not listening to these warnings. Today, Speaker Pelosi will hold a vote in the US House to raise the national debt limit to $14.3 trillion. I will proudly vote against it.