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Obama: U.S. must stop relying on China, other nations to buy our debt

2009-05-14 19:52:08 (GMT) (Caymanmama.com - Government Top Stories News)

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Phoenix, Arizona (CaymanMama.com) — President Barack Obama is now trying to tackle the extreme national debt by raising the issue of the country’s borrowing habits.

On Thursday, President Obama said that China and other lending nations may stop buying U.S. debt and added that the U.S. now needs to tackle its deficit head on in order to prevent long-term financial damage.

“The long-term deficit and debt that we have accumulated is unsustainable. We can’t keep on just borrowing from China or borrowing from other countries,” Obama said during a town hall meeting event in New Mexico.

“We have to pay interest on that debt and that means that we’re mortgaging our children’s future with more and more debt,” he added.

China is the single largest holder of American debt and at the end of February, owned $744 billion worth of America’s government securities, according to the U.S. Treasury.

Obama said the national debt matter will likely create bigger economic issues if foreign countries like China lost their desire for U.S. treasuries.

“What’s also true is at some point they’re just going to get tired of buying our debt,” he said. “And when that happens, we will really have to raise interest rates to be able to borrow and that will raise interest rates for everybody.”

The White House projected  the U.S. budget deficit will reach a staggering $1.84 trillion for the fiscal year that ends September 30.

Obama has promised to slash that number in half within his four year term even though he has implemented economic stimulus efforts which may increase it in the short term.



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