On Christmas Eve of all times, the Senate joined the House of Representatives of the previous week to increase our debit limit by $290 billion.
The current national debt is $12.1 trillion, up from $10.6 trillion just 11 months ago – by many accounts the largest increase in such a span in the history of our young nation. Stop, sip your morning coffee and let these massive numbers set in for a minute.
Looking at it another way, if President Obama and Congress maintain their current pace, we will have added $6 trillion in new debt to our nation by 2012. And despite what lip service we may hear about intentions of future debt reduction, the federal budget numbers predict our national debt to be at its highest level since WWII when our next presidential election takes place.
In comparison, President George W. Bush and Congress increased the national debt $1.8 trillion over his first term and $3 trillion during his second term. While much smaller than our current government’s debt addition pace, this is nothing to brag about either.
Focus for a moment on the previously mentioned debt limit increase, which will be mostly overshadowed in the media by the Senate health care vote coverage. While the shear amount of debt our country has amassed is stifling, the action to increase the debt limit is pretty simple.
Put it this way, if your household was the national government, you would have maxed out all your credit cards (including the ones “made in China”) and instead of trying to pay them back or reduce them, you would just call the credit card companies and ask them to lift your spending limit. It’s a dangerous financial move but it’s often practiced.
The only difference here is that the government is the spender AND the credit card company. What’s also interesting is that the $290 billion increase is just a short term “fix” and Congress will vote again, sometime in late January, for a much larger increase.
Thus the government will open another credit card to sustain its spending binge. Maybe this is apropos as many of us who literally buy into the commercial Christmas spending hype will be looking at our new debt around the same time. Maybe our government truly is of the people and “buy” the people.
Seriously, no one likes to open that credit card bill, look at what we bought, see how much we now owe and feel the guilt of gluttony – but at some point we all have to.
The finger pointing can go all around. Despite some obvious leniency and acceptance of spending due to things like 9/11, natural disasters such as Katrina and various recession halting tactics, both sides and all parties are responsible for this mess. It’s time to take a serious look at the damage being done to our future financial situation and act like adults.
How can we start? First it will take some serious political will to face the truth. We have to eventually confront our national entitlements that could easily bankrupt our nation if not addressed for the long haul. Everything from Medicare, Medicaid, Social Security, unemployment programs, Agriculture price supports and many “third rail” government programs including military spending need new approaches. What’s that definition of insanity again? We can’t just keep doing the same thing and expect a different result.
In addition, PAY-GO (pay-as-you-go) rules must be included in all spending bills. If you cannot find a way to pay for it or save on it, it just can’t happen despite the best of intentions. See subprime lending and housing foreclosures for real world examples.
How can we adjust these programs to maximize efficiency, contain costs and still provide for those that are truly in need while not expanding the “nanny” state direction we’re going? Big issues that need new bold, realistic answers – not just flowery rhetoric and decisions made to keep politicians in office.
On a personal note as I close my last op-ed column of 2009, I hope this time of year has been a most enjoyable one and I’d like to wish you Merry Christmas and a Happy New Debt.
Contact community columnist John Oxford, a banker in Tupelo, at firstname.lastname@example.org.