I will Gladly Pay You in 2085 For Some Benefits Today

I have been researching this blog for a while. I looked at graphs that show our government’s debt, projected debt, current and projected cost of interest on that debt, solvency problems with Medicare and Social Security and the ticking time bomb of unfunded public employee pensions. I will include links at the bottom to some of the research that I looked at. Otherwise, this posting would be 27 pages long and have 13 graphs. So I am starting with the assumption that America is on a dangerous fiscal path. If you don’t agree with that premise, start with the links at the bottom.

America being so far in the red should be a concern for Americans across the political spectrum. I don’t care about assessing blame to Democrats or Republicans for the mess. There is plenty of blame to spread around. The overspending under Bush doesn’t excuse the current government’s irresponsible spending. Nor does the increase in spending under current leadership vindicate the unacceptable spending on Bush’s watch. Nearly every congress and administration in the last century has over spent. It is easier politically to add to the deficit than it is to raise taxes or cut services. That is why $0.40 of every dollar the federal government spends today is borrowed money.

Europe right now is providing us a glimpse into our future if we continue to kick this can down the road. If you think that drastic austerity measures and violent riots by students and organized labor sounds like a good time, then by all means, let’s keep spending. I don’t know anyone who agrees with all the recommendations just released by the president’s deficit panel, but I applaud the existence of such a commission for advancing the conversation. Just like any 12-step program, the first step is admitting that you have a problem.

I consider my own life to be a microcosm for what is wrong with our nation’s spending habits. Earlier in life my income did not cover what I wanted to spend money on. Unfortunately for me, I had dozens of credit cards and credit offers to enable me to spend beyond my means. Now, later in life and making more money, I am still paying for the overspending of my 20s. By the time I am done paying off my credit cards, I will have paid more than double the price tag of the items that I purchased on credit. I am personally paying for my past lack of restraint and prudence in spending. Because of that, it is a lesson now drilled into me. I no longer buy what I want; I buy what I can afford and what I need. Apparently that’s a lesson being learned by many Americans. U.S. Consumer debt is down 15.5% since 2008, even as public debt moves sharply in the other direction.

The primary differences in effects felt by private versus public debt are the reason federal spending per citizen has increased so drastically over the last 100 years: 

1. The government does not have its own money. Government spends taxpayers’ money. All exponential future costs will likewise be shouldered by the future taxpayer.

2. The consequences of public debt can be deferred to future generations while the benefits are enjoyed by the generation doing the spending

Sometimes it’s hard for the average American to relate to what the federal deficit means to them personally. Under current deficit projections by the Congressional Budget Office, by 2020 just the cost of interest on our debt will amount to over $1,800 per person, per year. Considering that half of American citizens and most illegal immigrants do not pay federal income tax, that number is more than doubled when laid at the feet of the taxpayer.

We are practicing generational theft. It is immoral to saddle our children and grandchildren with insurmountable debt and unsustainable, unfunded liabilities because we do not want to make tough cuts or difficult sacrifices. How is it fair that a child born today enters this world with a $1 million dollar share of America’s unfunded liabilities and public debt?

Our responsibility to future generations is to leave them a planet not trashed by greed or laziness. The same morality demands we not bequeath our children a deficit ballooned by selfishness or weakness.

At the risk of “founder thumping”, I leave you with three quotes from Thomas Jefferson. As with many of our nation’s problems, our founding principles contain the answers:

I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements. If we can prevent the government from wasting the labor of the people, under the pretense of caring for them, they will be happy.

I hope a tax will be preferred [to a loan which threatens to saddle us with a perpetual debt], because it will awaken the attention of the people and make reformation and economy the principle of the next election. The frequent recurrence of this chastening operation can alone restrain the propensity of governments to enlarge expense beyond income.”
 (Notice he said that taxes are preferable to debt because citizens are more likely to take notice and do something about spending!)

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

Some research worth reading:

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5 Responses to I will Gladly Pay You in 2085 For Some Benefits Today

  1. Jeanne Guzman says:

    This is one of your most important blogs yet. I know the answer is a tough one. But not addressing it even worse!
    Just like the tax cuts they are trying to extend in DC all the while adding $200 Billion in earmarks to the passing and tieing it to 13 more months of unemployement, again with “borrowed” money. They are asking the wrong question! Not do we want it?? But, like you said, can we afford it? I hope Americans start to feel quilty enough to say STOP already!! Private citizens and charity will take care of the truly needy, I believe. I wonder what the government thinks the word, “Unsustainable” means! They ALL need a reality check. Great Blog. Thanks for your research.

  2. Chris Perez says:

    “Private citizens and charity will take care of the truly needy”??? In what parallel universe?

    Anyway, great posting Jamie — there is definitely common ground in that most Americans do not want to see our kids saddled with our debt. The problem is deciding where to cut and who to tax!

  3. Gordon Glenn says:

    I was just checking out the US Debt Clock site from your link.
    1. It says that the $14 Trillion National Debt is $45,000 per citizen or $127,000 per taxpayer. So your “$1 million dollar share of America’s unfunded liabilities and public debt” for a new baby must include seven-eights of a million in unfunded liablilites? I don’t see where you get that number.
    2. I noted that the three biggest expenditures (in approximately equal shares) are Medicare/Medicaid, Social Security and Defense/Wars. The first two are funded largely through payroll taxes. And Social Security will be running a surplus for about 25 more years. The second part of the third category (Wars) has been paid for entirely from borrowed funds, and is “off the books” whenever the budget is discussed.
    It is heartening that there is now at least some talk that defense spending has to be on the cutting table as well as domestic spending.

    • Hi Gordon,
      All spending, including defense should be looked at. I imagine there are cuts that can be made in all areas of govt spending. By the way, the number that I got the $1 million per citizen in liabilities + public debt is from the debt clock website bottom right corner of “liability per taxpayer”

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