The Debt Threat & Solution
I’ve been boiling maple sap all night. My mind works overtime while tending vats of boiling sap, which is akin to boiling water. One has plenty of time to think while watching water boil for twenty-four hours straight.
The second biggest threat to America is the inability of our government to curb spending. Too often, conversations about deficit spending invariably end up in a blame game. Each President and Congress blames the previous. This isn’t new and it’s unproductive. What is new is the nearness of the proverbial precipice about which America is precariously close. Now there’s a string of P words for ya’.
Government spending is epidemic in every sense of the word. It’s a contagious pandemic scourge that if not cured threatens our way of life at best and at worst the sovereignty of America. Why, What, and How works for this blog.
Why is it important that America be economically strong? There will always be a world super-power, if not America, another will assume the position. While faith is the foundation and original purpose for America, a vibrant economy is critical to Americans being able to exercise their constitutional rights that so many have given their all to earn and defend. And when we lose the status of super-power, those rights will erode. While immigration is a problem, a bigger problem would be a country to which nobody wanted to go.
What is the threat? Of course, the biggest threat to America is the movement to remove faith and the Bible as the primary source for American laws, values, and culture. But while the crumbling moral values is always at the forefront of my mind, that’s not what’s on my mind today. I’ll save the faith blog for another day. Watching the boiling maple sap has me thinking numbers. The thing I like about numbers is that there’s no room for debate—they require no faith. And they’re easy to understand.
For example, what if the typical family spent like the federal government? The median family income is $52,000. At the current rate, the federal government spends roughly $100 for every $81 it collects. If each family used the government budgetary logic, it would spend $64,000 per year, charging $12,000 per year on their credit cards. Having served on a bank board for nearly thirty years, I can tell you that some families have tried this and it didn’t work out well for them. But America’s situation is far worse. Now imagine that the family spending $12,000 per year more than their income is already $312,000 in debt. Well, that can’t happen. A private concern in that financial condition would have long since filed for bankruptcy protection. That’s where we are as a nation.
How do we get out of this mess? The strategy is simple—reduce spending. The tactic used to achieve the strategy is fodder for name-calling, filibusters, hours of cable news commentating, accusations, blaming, and ultimately no improvement. The reason solutions aren’t forthcoming is because spending results in votes. A politician’s first order of business is to get elected. Their second order of business is to get re-elected. Their third order of business is running the government. See the first two orders of business. As they say, therein lies the crux of the problem. When it comes to getting, everyone wants to be first, when it comes to giving something up, everyone hires a lobbyist to defend their government dole.
No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable.
- George Washington
I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.
- Thomas Jefferson
Just as a family can’t borrow its way to solvency, a country can’t tax its way to prosperity.
- Stan Crader (just made that up, probably been said before-it’s 5th grade math)
The proverbial low hanging fruit lies in two broad areas; taxes and entitlements. The tax base needs to be slightly broadened, just a nudge, so that a higher percent of the population participates in the revenue stream, giving more people a proverbial dog in the hunt. This would result in more people paying attention to government spending and holding their elected officials responsible. And simultaneously, the percent of families receiving government aid needs to be reduced. History proves that no country has survived when a majority of the people are dependent upon the government. For proof of the difficulty to reduce spending, look at the recent farm program, which boasts a reduction in the increase as a net reduction, and then see how the state of New York has circumvented the intention of the bill to significantly increase spending via the farm bill. It’s a vicious cycle that’s increasing is breadth and scope.
There’s no free lunch! The debt will be paid, either by the generation that created it, or the subsequent innocent.
Lastly, every complex problem has a simple solution that is probably wrong.
I need to go and check my maple sap.