Good book review in the Wall Street Journal on America’s Fiscal Constitution by Bill White.
The main idea is that we have gone from a nation where fiscal discipline and paying off ones debts was a valued tradition to one now where excess rules and profligate borrowing runs through our veins.
Both personal and national debt were viewed as a means of last resort and not something to be proud of, but rather as something done out of necessity to get through tough times.
On a personal level, we only borrowed what we needed and we payed it back on time or even early. Poverty was just one step away or even akin to servitude.
Similarly, on a national level, public debt was viewed as a safety net to preserve the union (i.e. war), territorial integrity (e.g. Louisiana Purchase), or in a severe recession (i.e. to maintain the government’s ability to spend in the short term).
The best option was seen as “pay as you go,” with the alternative, under limited circumstances, to “pay as soon as you can.”
However, the value placed on self and national discipline and sufficiency was replaced with elements of entitlement, greed, and waste.
The problem is once you have inequity in the system, then people feel the unfairness of it all, and give up caring about the system itself and just want to get what they see as their fair share.
Some politicians cater to these feelings of relative deprivation and are no longer viewed positively for fiscal constraint and ensuring our economic security, but rather “politicians gain favor by spending money without having to raise unpopular taxes.”
In essence, the government can give people more now, and they don’t have to pay for it until future generations–hence the ability to buy citizen’s political consent and even win elections by increasing the treasure chest even temporarily.
No, this is not China raising the fortunes of the middle class to keep the Communist Party in power, but rather this is us in the U.S. of A racking up tens of trillions of dollars in debt to keep people happy now (forget the future generations, let them fend for themselves).
Shake hands, kiss babies, and hand out dollar bills–give me, give me give me!
What has happened to us fighting hard and driving into the future on our own feet–together in strength and not as a debtor nation getting handouts from anyone that will lend us.
Soon, the Fed will be raising interest rates, and with a greater and greater national deficit to pay on, interest payments have the real potential to spiral out of control and leave our economy in shambles.
Like a credit card with interest payments that eclipse the principle borrowed, soon you are in over your head and there is nowhere to go but Chapter 11.
We’re not an inherently debtor nation, and we sure don’t want to be a deadbeat nation–isn’t it better to have what we really have financially and be who we really are and value?
Let’s leave our children and grandchildren economic and national security and not a towering pile of shameless debt, from mom and dad with love.
(Source Photo: Andy Blumenthal)