“There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.”
John Adams’ brilliant statement made over 200 years ago stands today as a warning – a stark assessment that is as scary as it is obvious from within the latest chapter of the Founders’ great experiment with republicanism.
Enslavement might seem too strong a word, but consider the reality – our entire political system is grinding to a halt over what responsible people acknowledge is too much debt. And unlike the times we broached the debt ceiling before – we have done so many times, including under Reagan, Clinton and W – the amount of borrowing makes the prospect of forced cuts based on actual revenues impossible and irresponsible. We are, frankly, enslaved by our debt.
Think about it this way – we now borrow 43 cents out of every dollar we spend. In order to pay our obligations from actual receipts prioritized as we have historically in such times – starting with interest on debt, military expenditures and then entitlements – no new debt will require us to shut down huge chunks of other necessary agencies. Put another way, the money needed to run the remaining parts of our government is almost all in that 43 cents we borrow. Without new debt we might not be able to put air traffic controllers on the job or inspect food. We need those services, so we must borrow more; enslaved by debt indeed.
I am not suggesting we accept new debt without cuts or that we can easily survive past August 2 without an increase; what I am acknowledging – what we must responsibly acknowledge – is that the size of our deficit is so enormous we have enslaved our choices. When you borrow 43% of your budget you grow increasingly dependent on credit as you incur more unproductive costs (such as interest payments) while each debt increase makes it harder to control future borrowing.
It’s a vicious cycle. We are told we must raise the debt limit to pay the debts, but then at the same time we keep spending well over revenues, requiring still more borrowing. As the aggregate debt builds up more and more of the annual budget has to be dedicated to paying the interest on debt. This requires even more borrowing – a pattern that leads to our current economic enslavement.
Think about our current fiscal trend line and then try to sleep. It took this country almost 200 years to incur $2.4 trillion in debt as an aggregate; President Obama is asserting that this barely covers us for 19 months. The more we spend the more we have to borrow – and the more limited our options.
And its not just options for today’s crisis; these debt levels, unfathomable just 15 years ago, are taking away our ability in the future to address the problems we will surely face. Consider: every man, woman, and child in this country already owes $45,000 (and climbing) in just federal debt – what resources will our grandkids rely upon to weather economic downturns and unforeseen international conflicts and volatility?
This is no doom and gloom exaggeration – if the president’s proposed February budget had been enacted, the CBO estimated, at minimum, it would have resulted in an increase in the national debt of $7 trillion before this president would finish his second term, for a total of over $11 trillion in new debt in just his 8 years. The savings? None of those show up until year six.
Eleven Trillion Dollars. A National debt greater than the GDP. A looming crisis worse than Greece.
This is not the time for political maneuvering or games of chicken; we must raise the debt limit and we must cut spending. And we need to do it now.
Otherwise we doom our posterity to economic enslavement.
Painting by Mather Brown
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