Can we but leave posterity with a settled form of government, an independant constitution of its own, the purchase at any price will be cheap. But to expend millions for the sake of getting a few vile acts repealed, and routing the present ministry only, is unworthy the charge, and is using posterity witht he utmost cruelty; because it is leaving them the great work to do, and a debt upon their backs, from which they derive no advantage. Such a thought is unworthy of a man of honor, and is the true characteristic of a narrow heart and a peddling politician.
Government debt is not always bad, but it is bad when the future generations are saddled with it and recieve nothing in return of worth. Paine argued for building a navy and merchant marine, what are we arguing to pass to our children? Is the cost worth the expense? Will our children be more free, or less free as a result of the debt we pass on to them? Consider, that the current Outstanding Public Debt as of
29 Dec 2009 at 06:35:43 PM GMT is:
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The estimated population of the United States is 307,556,843 so each citizen's share of this debt is $39,406.20. The National Debt has continued to increase an average of $3.78 billion per day since September 28, 2007!In Fiscal Year 2009 we spent $383 billion on interest payments alone. Enough to fund numerous federal institutions in full. Consider the funding requirements of these arms of government: NASA at $19 Billion, Education at $53 Billion, and Department of Transportation at $73 Billion. What are our children getting in return for this? Nothing. Well that is not exactly true, they are getting more debt, for we can't make all our interest payments, so the balance continues to grow.
Maybe we should consider Thomas Paine's words anew, before we vote to expand the debt to our children.
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Hi Scott - Every time I hear talk of how the National Debt is out of control I feel a sense of unreality. I've been hearing this for 25 years now (since I started paying attention to public discourse) and I feel like there have to be practical consequences that can be pointed to today where we can say: this is the result of out of control national debt. I'm not a skeptic so much as trying to understand the practical consequences. Any thoughts?
ReplyDeleteThe consequence is that debt makes one feel like they need more debt which drives you deeper in the hole. For example, take a person who has credit cards and maxed them out, he or she can't make the minimum payments any longer. The only options are to either declare bankruptcy and loose everything, or find another card company willing to issue another card and transfer the balance. This works for a little while until, there are no more card companies willing to issue cards. Then what, you declare bankruptcy and/or try to negotiate the terms. The debtor looses either way and the creditor wins either way. They made alot of money and now they get some of your stuff too.
ReplyDeleteThis happens in governments too. The only problem is that we think that the numbers are so large that the only way out is spending more and more. Although we understand that logic as obviously fallacious in the personal world, we seem to miss it in the corporate/government world. Here is where I see the practical things happening.
1. Bailing out businesses "too big to fail." This is debt piled upon more debt. Issuing another credit card to the irresponsible.
2. Inflation will be a product of debt. Someone has to pay, and if you can't roll over the debt to another credit card, then as a government your only option is to print more money, that means inflation.
3. Argentina is a classic example of what happens when debt gets too big to pay. Economy collapses, currency remonetized, pensions raided, etc...
4. Pork spending. As the numbers grow so astronomical, politicians don't even think about adding a few million here, a billion there, the numbers are so small and insignificant in terms of scale. Figure that 1 million is 1/10 of 1% of a billion dollars, and 1/1000 of 1% of a trillion dollars. This is nothing, comparatively. It is like asking a person earning $50,000 a year why they were irresponsible with $50 (billion scale) or 5 cents (trillion scale). Who cares the number is insignificant, that is until I have to pay back all debt. That's why we will never defeat pork spending until the debt issue is solved.
5. This one I am not as sure about, but i have a hunch it is related too. I keep reading of deals being made with chinese companies to purchase US technology. GM selling Saab to Chinese auto makers,etc. Might it be that as a country we have no choice but to give away our intellectual property in order to keep China buying our debt, they will buy it as long as they get the trade secrets and when they get enough of them to finally finish off our domestic manufacturing, where will we be?
Just some off the cuff thoughts. Is this what you were asking for?
Hi Scott - Thanks. I was actually in Argentina when in the early 80s they had to drop 5 or 6 zeros off the bills. It was getting to the point that it cost a million pesos just to buy a package of crackers, and yeah, we had 10,000,000 peso bills and such. It was absurd. Then one day ten million = 10 (but same purchasing power). I get what you are saying, but to make my point more explicit: if we have been over indebted for at least 25 years (my memory), there should be some clear consequences that we can point to today, benefits we no longer have, problems we are trying to solve, etc that are a result of this over spending. But these seem difficult to pin down and this lack of specificity seems to me to weaken the "no debt" message. I definitely agree with the speculative points, but I know that if a household is in debt up to the neck, there are some very practical consequences to that: you can't pay your bills, for example, you might be dodging calls from collections, you scramble to make your interest payments, you hawk you nice things for a fraction of their cost (that fits your point 5). But also, the analogy between country and household is not exact. For example, there is no international dept collection agency that is going to make rude calls to the White House :0) Also, the world cannot allow America to fail (in fact, the world cannot afford to have any country fail). Finally, a certain percentage of debt can necessary for a healthy business and also for a household. Example of a mortgage. Obviously we are over indebted. I don't argue against that. But the problem is not our total debt, rather, the amount we have gone over what is reasonable. I guess my bottom line is that I think this whole area is much more complicated than we realize (just check out the Wikipedia articles on national debt and related topic). I'm not disagreeing with you basic point, it's just that it raises so many questions! Blessings, brother
ReplyDeleteRob -
ReplyDeleteSeems that from 1986-2006 the income of the top 50% of tax returns rose 33%. Total income doubled taken across the board. The avg. tax rate decreased from 16% to 14% but that was because more people are making more money so they can lower the rate a bit, but inflation was nearly 60% for that 20 year period. This is all the effect of larger debt, print more money, so inflation rises, people need more money to live to people move up the tax chain, uncle sam is taking more money not only in taxes, but also in medicare, ssi, etc. so everyone is in actuality paying more. SSI rose from 12.26% in 1980 to 15.3% of total wages. Govt continues to take more, spends it and doesn't give us sound systems as a result. debt is all part of it, without debt, currencies are actually fairly stable, but debt makes currency unstable. Some debt is ok, I am not arguing against all debt, but against crazy debt that you can never get out of. All the founders thought that each generation should pay for the debt it incurred and leave nothing for the next generation to live with. Just the opposite is happening. As for not allowing a country to fail. Sure, we do it all the time - Argentina, Zimbabwe, Wienmar republic, various african countries. The question is when do we become expendable and too big a cancer not to cut us off. We may be headed there in our lifetime as China takes on a more pronounced play in global economics.