The Day of Reckoning

On this Easter Sunday, I am grateful for the opportunity to enjoy a bit of “domestic tranquility” while contemplating America's financial future. There is a web site that every American should be aware of: the National Debt Clock (http://www.brillig.com/debt_clock/). It tracks the national debt (currently about $9 trillion) and calculates each citizen's share (about $30,000). What are the implications of this staggering debt? Anyone with an understanding of basic finance knows that the day of reckoning will eventually come for the individual or organization that habitually spends more than it takes in. Our nation is no exception, and the day of reckoning will come if we remain on this slippery slope. Consider the following statement from a 2007 report by the U.S. Government Accountability Office:

“From a broad federal financial management perspective, the federal government’s financial condition and fiscal outlook are worse than many may understand. The U.S. government’s total reported liabilities, net social insurance commitments, and other fiscal exposures continue to grow and now total over $50 trillion, representing approximately four times the nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000. The federal government faces large and growing structural deficits in the future due primarily to known demographic trends and rising health care costs. These structural deficits which are virtually certain given the design of our current programs and policies will mean escalating and ultimately unsustainable federal deficits and debt levels. Based on various measures and using reasonable assumptions the federal government’s current fiscal policy is unsustainable. Continuing on this imprudent and unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our domestic tranquility and national security. Tough choices by the President and the Congress are necessary in order to address the nation’s large and growing long-term fiscal imbalance.” (http://tinyurl.com/36uy57)

A recent issue of The Patriot Post (http://tinyurl.com/346jh3) reported that, “Currently, there is no political will in Congress to actually do something about runaway spending ...” Senator Bob Bennett from Utah recently offered a prime example of this mentality. Asked about deficits in a recent interview, he replied, “Now, you talk about deficit, the amount we over-spend per year, it is currently below historic norms as a percentage of GDP. And, quite frankly, you say, what are we going to do? This last year, the deficit, that is the amount spent over the amount we took in, was $100 billion less than it was projected ...” (http://tinyurl.com/27gfjp)

So what, exactly, is Bob Bennett “going to do?” Sit around and wait to see if deficits are “less than projected” and then take credit for it? This hardly sounds like a solution. We are currently spending $406 billion (http://www.federalbudget.com/) in interest alone on the national debt. It doesn't matter how that compares to the GDP, it is a lot of money that could be better used elsewhere.

What we need is permanent change, including a balanced budget amendment. A good first step would be to institute a law that I call “pay for performance.” Under this law, a high percentage of congressional pay would be based on the ability of legislators to balance the budget. A portion of legislators' salaries would be set aside at the beginning of the year, and if they manage to balance the budget they'll receive it at the end of the year. If the budget doesn't balance, this money will go towards paying down the deficit.

It's time for patriotic citizens to stand up and be counted. Write to your representatives and tell them you've had enough of their fiscal mismanagement and demand a new era of accountability in Washington! In 1775, Samuel Adams said, “It does not take a majority to prevail ... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.”

Freedom from national debt is a worthy goal, one that our children will thank us for achieving. Let's start a few brushfires this week.

God Bless the U.S.A.,
Strategos