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:
- The U.S. National Debt Clock: tracks our public debt, liabilities and many other relevant numbers – http://www.usdebtclock.org/ (Check out the Time Machine Feature in the top right that lets you look at past and future numbers)
- How The Ballooning Federal Deficit Affects Your Household Income – http://www.businessinsider.com/the-zero-deficit-line-2010-12 (Interestingly, research shows that it is over spending per citizen in relation to median income that causes deficits, not changes in tax rates)
- Start Spreading the News: A Public-Pension Crisis May Be Brewing – http://www.foxbusiness.com/markets/2010/12/10/start-spreading-news-public-pension-crisis-brewing/
- CBO: Fix The Deficit Now Or Everyone Under The Age Of 20 Gets Screwed – http://www.businessinsider.com/cbo-economic-impact-of-waiting-to-fix-budget-2010-12#ixzz17lnMMLyV
- Trends in Consumer Debt – http://finance.fortune.cnn.com/2010/11/10/consumer-debts-wont-return-anytime-soon/
- How to Cut $343 Billion from the Federal Budget – http://www.heritage.org/research/reports/2010/10/how-to-cut-343-billion-from-the-federal-budget (What if the government only spent on things we NEED and can AFFORD? That means cutting a lot of things that people want)
- Not ready for that ‘adult conversation’ on debt? – http://www.msnbc.msn.com/id/40573747/ns/politics/
- The CBO anticipates that the US federal government will have an annual spend of $723 billion dollars for net interest by the year 2020 – http://cboblog.cbo.gov/?p=465