Monday, February 18, 2008

The National Debt.

Today I heard that the national debt of the United States is 9 trillion dollars. That's an almost inconceivable sum. When I was a kid I remember learning in class that my country owed one trillion bucks to investors, many of whom were foreigners. People were somewhat concerned about that fact back then. However Ronald Reagan was president, and he seemed to be able to hypnotize a large proportion of the population into thinking that he could do no wrong. As he wasted astronomical sums on worthless "defense" projects, he was somehow able to convince folks that he heralded a "new morning" in America. Little did they know how much Reagan had progressed as an actor since his early days of red-baiting and starring in movies opposite a monkey named "Bonzo". It's been a long day of senseless spending since then, with a break of only a few short hours during the Clinton presidency of the 90's. Still the Right insists on worshiping the "Gipper" as a saint.

What's especially ironic about all of this is the old chestnut that's continuously repeated by the GOP about Democrats- that they are irresponsible spenders. You can hear this on any given day by tuning into talk radio. You'd think that the spin doctors on the left could have reversed this perception by now. Unfortunately they don't seem as willing as their counterparts in the GOP to play hardball politics. For some reason they stare dumbly at the accusations that they are spending all our tax dollars on welfare programs. This despite the fact that they'd given up their "War on Poverty" when LBJ decided not to run for a second term. There is no class war in society. If there were, then the Left would have done something about Republican proposals to channel the short-lived budget surpluses of the 90's directly into the pockets of the wealthiest Americans.

I'm willing to give the first Bush some credit for raising taxes despite promising his constituency that he wouldn't. Of course he took a serious beating for his breach in loyalty. He is still excoriated by many "conservatives" for having done so. Anyway it helped pave the way for Bill Clinton to finally balance the budget. It's almost surreal, but it's true. As recently as a decade ago we were having discussions about what to do with this new windfall of cash. Everyone was trying to seize the credit for the "bipartisan" legislation that put us in the black, yet they weren't too distracted to make plans to grab some of that money for their respective supporters. The Dems suggested that it be used to shore up the Social Security balance, while the Republicans started promising tax cuts.

In my view the only appropriate thing to have done with any surplus was to start chipping away at the national debt. But Congress was controlled by a group of Republicans who were still smarting over the betrayals of George H. W. Bush, and they wanted corporate and investment tax relief immediately. George Dubya Bush was able to weasel his way into the executive office by promising rebates of $300 for working class stiffs, and tens of thousands for his wealthy buddies. Little did anyone expect that he would go on to sink 600 million dollars into an amorphous "War on Terrorism". Certainly no one could have possibly anticipated that all that money would only lead to a situation of increased threat. After investing scads of cash into a six-year occupation, all we have to show for it is a seemingly permanent Al Qaeda branch in Iraq. This week the regional terrorist commander announced his intentions to use his growing presence in Iraq as a staging area for direct attacks on Jerusalem.

Meanwhile back home, our "decider-in-chief" has proposed a 3 trillion dollar federal budget for the upcoming fiscal year. Where are the "fiscal conservatives" I hear so much about? We've gotten to the point that each and every American citizen owes over $30,000 as his/her personal share of the national debt. And this includes my new born son. How long do you think it takes a middle class worker to save up $30,000? If we take into account the huge sums that the average citizen needs to pay to bring his/her own finances in to the black, then the situation is indeed dire. This is our modern consumerist capitalist mentality. Perpetual spending is supposed to equal perpetual growth. Our "economic experts" are so fixated in attacking socialist concepts that they have blinded themselves to the tragic flaws in their own thinking. It's become quite clear that all the old models have proved themselves unsustainable and obsolete. Yet people are so obsessed with getting in on the scam that nothing is being done to challenge the prevailing perceptions.

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Blogger John Morris said...

Sorry for not responding to this earlier,I am having some trouble with blogger.

I think financial experts put the actual debt level of just the federal government at something north of 57 trillion dollars.
in order to understand this you have to get the basic ideas behind accounting.

accounting, in the private sector, is designed to not just give one a picture of just ones cash account
( how much one owes this month vs what one is taking in) or just a picture of official "on the books" debt in terms of bonds. Private companies have to try to give an accurate picture of their total potential liabilities vs, their assets. these would include any and all, outstanding promises made by the company such as promises to pay for pensions, future employee healthcare expenses and all thye costs needed to maintain and replace essential plants and equipment.

A private individual who for example co-signed on several loans would be considered to potentialy liable for them. The government, however uses what is called cash accounting which makes no attempt to show what it would take to pay off all of it's open ended promises and potential liabilities.

2:20 PM  
Blogger Merge Divide said...

Certainly the situation as you present it is far worse than even I suggest in my post. For the edification of whomever may read these comments, could you post a link to a source that projects the nation's debt to be 57 trillion dollars?

7:39 PM  
Anonymous John Morris said...

Here is a link to the post I did on the subject which has a link to a USA Today article.

I think any attempt to pin it down is impossible since the government is always adding new open ended promises.

To understand the real problem, you have to look at these promises and not just the official- on the books debt. Failure to maintain roads, bridges, dams and other government buildings for example represents trillions in off the books liabilities.

4:45 PM  

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