We Need to Finish this Conversation
Published in the Boulder Daily Camera, June 12, 2011
The finances of our nation are in dire straits. No matter how you look at it, we can’t keep doing what we’re doing, and there’s no easy fixes. What used to be something that would affect us in years or decades is now only months or a few years away from making bad things happen. Uh oh.
Take our budget deficit. Next year, the Federal Government deficit is going to be about $1.5 Trillion. Big number, but consider that the whole budget is only about 2½ times that. So, the Government is borrowing about 40% of what it spends. Yikes. And, the USA Today on June 7th reported that, if the government did their accounting like businesses do, the 2010 deficit would have been $5.3 Trillion, or about a third of what the whole United States economy produces each year. Double Yikes.
Plus, the United States Government already owes a lot of money. Using the government’s numbers, the US Treasury owes $14.3 Trillion or about $120,000 for every American household. Big number. If you use the USA Today’s numbers which reflect all of our current obligations totaling $61.4 Trillion, that number goes up to over $516,000. Ouch.
So what? Uncle Sam always seems to get what they need, right? Well, that’s been true for a few decades, but not forever. Lots of people and nations that have lent us money years are starting to wonder if we’re still a good investment. The people that rate bonds have warned investors that US Treasury Bonds might actually be risky, so, we should anticipate paying a higher interest rate to keep the money flowing. When you have $14 Trillion in debt, a 1% increase in interest rates costs another $140 billion each year. More ouch, more Yikes.
Still, how does all this affect us now? We need jobs and economic growth, so who cares about debt and deficits? Well, there’s only so much money to go around, and when the government sucks is all up, either through spending or borrowing, that makes it harder for people to spend it or private enterprise to invest it. No free lunches – if you want more for the part of the economy that creates and spends wealth – the businesses and consumers – the Government needs to trim its sails.
Why have this conversation now? Mostly, because we’ve already started it and, if we give up on making the hard choices now, you can be sure we won’t be talking about it again for years. That would be more years of the world wondering if the US Government can ever get their house in order and the economic stagnation brought on by uncertainty. Why would we do that?
The good news is that we are talking about it. Hard issues have been placed squarely on the table. Paul Ryan put a plan on the table and other Republican Presidential candidates, like Tim Pawlenty, are throwing out specific proposals, too. Sure, lots of controversial topics, but with a problem this big, there are going to be some unpopular ideas. But, the good thing, the really good thing, is that Republicans are giving us specific proposals with numbers that add up. Something to talk about, for sure.
What are the Democrats giving us? Well, so far, the President gave us a 2012 budget proposal that was so bad that, when the Senate voted on it, it got zero votes. None. It was that bad.
The Democratic Senate’s contribution? Harry Reid has been quite clear that he doesn’t want to propose anything that might involve political risk to Democrats in 2012. Huh? No help there.
The President and Congressional Democrats seem to view “leadership” as taking pot shots at Republican proposals and raising taxes on the rich, like that’s all we need to do. However, the tax increases they propose won’t even raise a tenth of what we need to balance the budget. In fact, using the President’s 2011 budget figures, if you doubled the income taxes of allof the 49% of Americans that are paying income taxes, you still would only get 70% of what’s needed. We may need to increase taxes, but Democrats should stop ignoring the magnitude of the problem and start putting ideas on the table that actually add up. Then, we could have an honest debate and come to terms. Do your job, guys.
We’ll sort it out, because that’s what Americans do. Waiting will only make something that’s hard and painful today excruciating and debilitating tomorrow. Finish this conversation now, please.
The finances of our nation are in dire straits. No matter how you look at it, we can’t keep doing what we’re doing, and there’s no easy fixes. What used to be something that would affect us in years or decades is now only months or a few years away from making bad things happen. Uh oh.
Take our budget deficit. Next year, the Federal Government deficit is going to be about $1.5 Trillion. Big number, but consider that the whole budget is only about 2½ times that. So, the Government is borrowing about 40% of what it spends. Yikes. And, the USA Today on June 7th reported that, if the government did their accounting like businesses do, the 2010 deficit would have been $5.3 Trillion, or about a third of what the whole United States economy produces each year. Double Yikes.
Plus, the United States Government already owes a lot of money. Using the government’s numbers, the US Treasury owes $14.3 Trillion or about $120,000 for every American household. Big number. If you use the USA Today’s numbers which reflect all of our current obligations totaling $61.4 Trillion, that number goes up to over $516,000. Ouch.
So what? Uncle Sam always seems to get what they need, right? Well, that’s been true for a few decades, but not forever. Lots of people and nations that have lent us money years are starting to wonder if we’re still a good investment. The people that rate bonds have warned investors that US Treasury Bonds might actually be risky, so, we should anticipate paying a higher interest rate to keep the money flowing. When you have $14 Trillion in debt, a 1% increase in interest rates costs another $140 billion each year. More ouch, more Yikes.
Still, how does all this affect us now? We need jobs and economic growth, so who cares about debt and deficits? Well, there’s only so much money to go around, and when the government sucks is all up, either through spending or borrowing, that makes it harder for people to spend it or private enterprise to invest it. No free lunches – if you want more for the part of the economy that creates and spends wealth – the businesses and consumers – the Government needs to trim its sails.
Why have this conversation now? Mostly, because we’ve already started it and, if we give up on making the hard choices now, you can be sure we won’t be talking about it again for years. That would be more years of the world wondering if the US Government can ever get their house in order and the economic stagnation brought on by uncertainty. Why would we do that?
The good news is that we are talking about it. Hard issues have been placed squarely on the table. Paul Ryan put a plan on the table and other Republican Presidential candidates, like Tim Pawlenty, are throwing out specific proposals, too. Sure, lots of controversial topics, but with a problem this big, there are going to be some unpopular ideas. But, the good thing, the really good thing, is that Republicans are giving us specific proposals with numbers that add up. Something to talk about, for sure.
What are the Democrats giving us? Well, so far, the President gave us a 2012 budget proposal that was so bad that, when the Senate voted on it, it got zero votes. None. It was that bad.
The Democratic Senate’s contribution? Harry Reid has been quite clear that he doesn’t want to propose anything that might involve political risk to Democrats in 2012. Huh? No help there.
The President and Congressional Democrats seem to view “leadership” as taking pot shots at Republican proposals and raising taxes on the rich, like that’s all we need to do. However, the tax increases they propose won’t even raise a tenth of what we need to balance the budget. In fact, using the President’s 2011 budget figures, if you doubled the income taxes of allof the 49% of Americans that are paying income taxes, you still would only get 70% of what’s needed. We may need to increase taxes, but Democrats should stop ignoring the magnitude of the problem and start putting ideas on the table that actually add up. Then, we could have an honest debate and come to terms. Do your job, guys.
We’ll sort it out, because that’s what Americans do. Waiting will only make something that’s hard and painful today excruciating and debilitating tomorrow. Finish this conversation now, please.
