Saturday, July 14, 2012

The Candidates Owe Us the Truth About Debt

Debt (noun) 1.something that is owed or that one is bound to pay; a liability or obligation; the condition of being under such an obligation                 --Random House Dictionary

“A billion here, a billion there, sooner or later it adds up to real money.”                            --Senator Everett Dirksen

I just don’t like being in debt, owing money to someone or some institution.  I know that’s not a very popular opinion, for after all indebtedness, having a house mortgage or a student loan or a business loan or a car loan, or in the case of the federal government, having a national debt: it is the “all American way”, right?  To be leveraged up, in hock, in the red, beholden, in arrears, maxed out, in the hole.

We Americans owe a lot of money these days. According to the New York Federal Reserve Bank we owe $11.5 trillion dollars in consumer debt: credit cards, auto loans, etc.  Student loan debt stands at $904 billion, up 275 percent since 2003.  Mortgage debt is $13.5 trillion.  Business debt is $11.9 trillion.  The national debt, the total sum of money Uncle Sam (that’s you and I) owes to its creditors is $15.8 trillion. 

I get that debt makes the economy move and without debt I never could have gone to grad school or bought that new car.  Debt allows consumers to purchase things like homes and vehicles they otherwise would not be able to. Businesses could and would not expand and grow if not for the ability to secure loans.  Local, state and federal governments could not keep the country functioning if not for debt and yet: am I in the minority in getting very worried about all this debt we are swimming in?  Our debt is not stabilizing or shrinking but is instead growing, especially when compared to our ability to pay it all back.

Debt, while a gift short term, always comes back home long term. There’s no way around this truism save bankruptcy or default. You borrow and you are obligated to pay it all back.  Just ask Greece, Portugal, Spain, Ireland and the world’s king of debt, Iceland, which went belly up just a few years ago, a whole country wiped out financially.     

The figure “$1 trillion” kind of freaks me out too.  That’s a lot of cash and zeroes: $1,000,000,000,000.  If I spent a million dollars every day from the day Jesus was born until now I still wouldn’t get to a trillion. A trillion single dollar bills laid end to end could reach the sun 93 million miles away. A trillion dollars could pay the rent of every renter in the U.S. for three years.  A trillion dollars could pay for an additional eleven weeks vacation for every American worker—that one I like! A trillion dollars is a huge amount of cash. Now multiply it ten fold and more—that’s how much we owe personally and collectively.

Last week President Obama and Governor Mitt Romney, one of whom will be our President next January 20th, both rolled out competing plans on how to deal with the expiration of the Bush-era tax cuts which are due to end December 31st.  You’d hope and think that given our gargantuan national debt, at the highest level since World War II, both presidential candidates might have had the courage to at least discuss allowing these cuts to end and for taxes to rise. Or perhaps suggest the cuts be phased out over five years to avoid a jolt to the fragile economy.  We are still spending much more than we take in (try a deficit of more than $1 trillion this year) so the United States either needs more revenue, or more program cuts or some of both. 

But neither candidate did this, did not even come close and both, worried much more about votes than true leadership, advocated going even deeper and deeper into debt.  Obama wants to allow taxes to rise on those making more than $250,000, resulting in a $2 trillion hole in the budget in the next decade. Romney wants to keep all the tax cuts equaling a $2.8 trillion dollar shortfall. 

As a person of faith I’d say it is a civic sin for us as a nation to continue to go deeper and deeper into debt and for “leaders” like Romney and Obama to essentially ignore this truth for political gain.  A sin. As the Book of Proverbs notes, “The parents eat sour grapes and the children’s teeth are set on edge.”  We in this generation are living on borrowed money and our children and grandchildren will one day have to pay the price: $50,729.80 per citizen and counting.

No getting around that reality.  One day the Japanese and the Chinese, who hold most of our debt, are going to come calling or call in their chits and maybe even stop funding our national spending spree.  And what then?

Some liken our race to deeper levels of personal and communal indebtedness as a game of musical chairs. As long as the music plays and the money flows and the players move around, the game can continue.  But one day the music stops.  It just has to. 

President Obama and Governor Romney: are you listening?


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