Imagine America as a sweaty, scruffy, cigarette-smoking dude -- with a drug problem.
That vision comes to life in a new political ad:
"America could learn a lot from a drug addict," says Addicted Dude. "Even though this country’s $14 trillion in debt, Washington raised the debt ceiling 10 times in the last 10 years. Each time – it’s like another hit – another spending hit. But you’re the junkies.
"41 cents out of every dollar you spend is borrowed from places like China. So China is like your dealer, and your addiction and your dealer control your life. To borrow less, you need to spend less. Yeah … Washington could learn a lot from a drug addict."
The ad was paid for by the Public Notice Research & Education Fund, a sister organization to Public Notice. In a press release, Public Notice said it was airing the ads in hopes that the "super committee" in Congress working on a new budget would adopt more spending cuts.
Public Notice says its mission is "to increase the public’s awareness and understanding of the economic issues that affect their daily lives, communities, and children and grandchildren." That sounded rather generic to us, and we wanted to know more about Public Notice. However, as a 501(c)(4), Public Notice is not required to disclose its donors. Public Notice’s executive director, Gretchen Hamel, is a former spokesman for the House Republican Conference.
We decided to fact-check the ad’s claim that "41 cents out of every dollar you spend is borrowed from places like China."
To check this item, we turned to two government agencies that monitor the economy.
We consulted the most recent report from the nonpartisan Congressional Budget Office to see if 41 cents of every dollar is borrowed.
The numbers show that for fiscal year 2011 (which ended Sept. 30, 2011), the federal government took in $2.3 trillion and spent $3.6 trillion. So the shortfall between receipts and outlays was about $1.3 trillion. That means about 36 cents of every dollar spent was borrowed.
That’s pretty close to the 41 percent the ad cited. When we contacted Public Notice, they told us they took their numbers from an earlier report published in June 2011 that included numbers for fiscal year 2010. The numbers we used were for fiscal year 2011 and published Nov. 7, 2011.
Next, for the sake of thoroughness, we checked how much U.S. debt is held by China. China is the number one foreign country holding U.S. debt, according to the U.S. Treasury Department.
China holds $1.15 trillion in U.S. debt, followed by Japan with $957 billion; the United Kingdom with $422 billion; and a group of oil-exporting countries that collectively hold $230 billion. (See the entire list.)
So is Addicted Dude a good analogy for our budget situation? If China is our drug dealer, China’s offering us the good stuff at an extremely low mark-up -- interest rates on U.S. Treasuries are near rock-bottom right now. On the other hand ... that’s how they get you hooked.
So we’ll leave it up to you to decide whether the metaphor is apt.
The ad from Public Notice says, "41 cents out of every dollar you spend is borrowed from places like China." China is indeed the country that holds the most U.S. debt. But the most recent numbers on U.S. debt put the borrowed amount slightly lower, at 36 cents on the dollar. So we rate this statement Mostly True.