WNYC's Bob Hennelly is an award-winning investigative journalist. While at WNYC he has reported on a wide gamut of major public policy questions ranging from immigration and homeland security to power outages and utility mergers.
Stucknation: America's Debt Addiction is About Character, Not Numbers
Wednesday, August 10, 2011 - 12:37 PM
Debt is really not about numbers, it is about character. Incurring debt today enables us to get something right now and defer the consequences down the road. And in the case of our trillions in national debt, we simply put it on the backs of our children and their children. Why? Because we can and we want what we want NOW!
Sure there are times debt can be justified, like when you build infrastructure that will pay dividends in improved quality of life for your descendants, but our country hasn't done that.
As anyone who runs a household knows, budgeting is all about expectations. Ours seem to collectively know no bounds, we want to dominate the planet and then retire early.
And so our culture of instant material gratification is going to be really tried by the "Great Economic Interruption" our multitiered debt machine has left us with. It's not just the national debt.
We have permitted debt and speculation to hollow out America's core. We mistake playing the margins, the spread and the angles as the surest way to prosperity.
Despite all the stroking we get from our "leaders" about how great is our national character, there's very little national cohesion for our leaders to even call upon. So in reality, the partisan self-interested national government reflects perfectly the electorate from which it came.
The Tea Party invoked the Framers of the Constitution in their bid to steer our ship of state on a fresh course of frugality. As near a sacred moment as the drafting of our founding documents may have been, a few major developments have occurred since that have forever altered our nation's obligations to a smaller world.
Government does many critical things. Since the federal government dropped the atomic bomb on another sovereign nation, it has been impossible to return to a Federal government on the pastoral scale of a 1776 America. Running the nation's government, even a scaled-down version, will be forever pricey.
But our postmodern complications shouldn't permit us to abandon the transcendent common sense of our founders, either.
Perhaps a national reassertion of thrift and simplicity might go along way to healing not just ourselves, but our planet. This global debt crisis is an opportunity for a planetary reset.
By borrowing so extensively to pay for the operation of the federal government and our entitlements we create a kind of pyramid scheme that shackles future Americans not even yet on the planet to redeem our choices by foreclosing their own. We be best to try and leave them as unencumbered as we can.
How Did We Get Here: Our vast borrowing means we could defer the debate over social equity and cut taxes massively for the wealthy and wage multiple wars. We could avoid conflict about who should pay, but maybe if our wars were COD we'd be less likely to wage them. And what do we have to show for the ones we have waged - the love and affection of the natives of those countries we "saved?" We still have to take our shoes and belt off at the airport.
Using debt instead of taxes to fuel the massive U.S. military complex permitted U.S. multi-national corporations to amass hundreds of billions overseas in profits while avoiding having to pay for the U.S. military force protection that makes their global enterprise possible. And for them America is just, well, so yesterday.
But sadly the federal debt is just one layer of a vast debt complex that has grown exponentially since World War II. The financial services industry has outdone itself finding ways to attach itself to almost every person and enterprise. They made it like renting oxygen.
It's not just federal debt, either. State and local governments have racked up $2.5 trillion dollars in debt. For local governments the annual debt finance charge for past borrowing is $66 billion dollars. States fork over another $47 billion dollars a year.
And let's loop in the U.S. consumer's debt load while we're at it - excluding mortgages. Yup, the debt ooze is under that hackneyed "kitchen table" the politicians invoke. Money-zine.com cited Federal Reserve numbers for 2010 that showed U.S. consumer debt at close to $2.4 trillion dollars or $7,800 dollars in debt for every man, woman and child in the United States. As a consequence the average American household is paying double digits to service their debt, making it nearly impossible to save.
And just as federal borrowing permitted us to defer facing painful choices, the expansion of consumer debt helped working Americans deceive themselves that they were holding their own in terms of their wages even as corporate profits soared. (We are all going to Disney World on the 90-day plan!) The sad truth is for decades under the leadership of both parties Americans who sell their labor to survive were slipping further and further behind.
The tough truth is only by stepping up now and doing our best to figure out how we can compassionately reduce all our debts will we ever really "own the future" and liberate ourselves from a world where debt is our sovereign.