Reasonable Nuts

Sometimes nuts. Always reasonable. We are REASONABLE NUTS.

Thursday, October 12, 2006

Nuttiness defined: The National Debt

My friend - and Reasonable Nut Emeritus - Paul, rightly took issue with a post here the other day. It was actually a reprint of a Wall Street Journal opinion piece concerning the U.S. Federal budget deficit. Paul was concerned that by posting the piece, the Reasonable Nuts were missing the big picture: that we as a nation are still sinking further into debt. I commented on his site to the contrary. Those comments took on a life of their own and I decided to send a portion of them to a few of my representatives in the Federal government. As always, I expect a nice reply. What more should I expect?

Here's the text of my reply to Paul:

Paul -

I wholeheartedly agree with your assessment.

About the ‘Nuts, it is important to note that some of us seek to defend the Republican Party more forcefully than do others. I am of the latter sort - a conservative / libertarian who allies himself with no particular party, but seeks allegiances only with fellow travelers also seeking the big truth.

While the decrease in the annual budget deficit is a welcome (potential) bellwether, it does nothing to promote the decrease of the national debt, the ceiling of which was recently raised to over $9 trillion. That’s 9 thousand thousand thousand thousand dollars, between you, me, and our American brothers and sisters.

My father-in-law and I recently had a conversation in which he asked me about what I was most concerned. “The national debt” was my answer. Were it Americans who owed other Americans this debt, I would be concerned still, but not nearly as much as I am given the fact most of our recent debt is in the form of treasuries bought by nations not exactly allied with us - this concerns me greatly.

What I told my father-in-law was that I’d like to see a president come clean with the people - explain matters in the simplest of ways - say something like this:
“My fellow Americans, today I come to you with a heavy heart, but a clean conscience. My fiscal advisors tell me that we - your federal government - those you have entrusted with power and privelege, we have been overspending your money for a long time and that it’s time to change this behavior.”

“In your personal finances, you have to make tough decisions. You only make so much income. If your expenses exceed your income, you go into debt, if you’re priveleged to have credit extended to you. You can only work so hard, only make so much money. At some point, you have to balance your budget and ensure your expenses are less than your income. Otherwise, you sink further into debt and that much closer to insolvency.”

“Credit is a privelege, not a right. It requires responsibility in order for it to be a useful tool. Otherwise, it becomes a master and you, its slave. Your federal government has such privelege - and has abused that privelege for a long time. Because the American taxpayer funds the federal government, he is the one enslaved by the debts incurred in his name.”

“You have possibly heard the federal budget deficit has been cut quite a bit recently - due to extra taxes coming in from your hard work. This is a very good thing. But it only means that each year we go less deeply into the same dangerous hole. That hole is called ‘the national debt’. This is how much money your congress has spent in excess of tax revenues, over the years, with interest compounded. This is money that your government has borrowed on your behalf, without your direct approval.”

“You may have also heard that congress recently approved raising the ceiling on that debt to $9 trillion. How much is a trillion? A million millionaires have a trillion dollars between them. It’s a number beyond the combined wealth of most of the world’s nations. It amounts to nearly $30,000 for every man, woman, and child in the U.S. - or - more appropriately, $100,000 for every taxpayer. And that’s in the end who has been saddled with this debt - the American taxpayer.”

“I have been fortunate in my life to have an extra $100,000 for which I could repay my share of this burden. But I realize that most of us could not. And it seems most of us should not - since we had no say in the matter. Or did we?”

“This is the tough part - the part where we start to see our role in this mess. The stark truth is that we have always had a say. It’s called the electoral process. We all along have had the ability to hold congress accountable for its actions by holding our elected representatives accountable through the pressure of reelection. If my congressman failed to strongly support a balanced budget - or better - a budget with a small surplus, I should have voted for someone who would - and let him know I considered this issue important.”

“You may think that the President has control of the federal budget. He does not. The President submits a budget, but congress can and always does only use this as the merest of guidelines. Congress, as provided for in the Constitution, sets and approves the federal budget. The President only has veto authority.”

“So why have I not vetoed past budgets? This is a good question. I have to say I have not been strong enough on this issue. It’s a complex one. If I veto a budget and a new one is not approved in time, parts of your government in effect may shut down and some people’s needs may not be met. There are some who have somewhat flippantly argued that we should indeed allow the federal government to shut down - precisely to discover what needs actually exist and conversely, where elements of the government are ripe for elimination. As we do nothing about the issues of the looming federal budget deficit and national debt, I admit I am more sensitive to this notion of shutting down the government and sorting the wheat from chaff. But I do not want to have to do this. I’d like to take a less drastic approach.”

“What I am asking congress is that they approve, without adding one additional dollar, the budget I am sending them tomorrow. In this budget, nearly all programs and departments are having their funding cut 10% - the amount of the current deficit. This alone will balance the budget and is a fair approach. Additionally, I have sought to eliminate several programs that combined, will amount to a $500 billion annual budget surplus, given current tax revenues. This annual surplus, applied to the national debt, should pay off that debt within a generation. I have sought the creation of only one additional program - and that is an office solely tasked with the elimination of other programs. One day, I hope to see that it has eliminated itself.”

“Many have lived off the excesses of the federal government for a long time. Immediately following this talk, you will hear the din of their voices as they call my proposal draconian, excessive, impossible, foolish. Let them call it what they will, but foolishness it is not. It is the most sane thing we can do today for our future. I will not approve a budget that does not contain a surplus within it. And to those who would seek to deceive the American people through fuzzy math and numeric skullduggery - mark my words - you will not succeed. Your actions will be discovered and published for all to see. I want to see a balanced budget containing a surplus and arrived at through GAAP accounting standards. These are the same standards which exposed fraudulent activities at Enron and Worldcomm. Let’s apply them to the federal budget.”

“What I most want you to know, my fellow Americans, is that we can get out of the situation we are in today. But I also want you to know the fact that we have to do this. All debts must be repaid, one way or another. Because we’ve waited so very long, we are left with only one way to repay our debts: trim our budget and eliminate excess. Let’s get a good night’s sleep and tomorrow, roll-up our sleeves and get to work.”
So what's the National Debt today?

Click the above figure for a wealth of information concerning the National Debt. Additionally, you can find good information at the Bureau of the Public Debt.

Bill Bonner and Addison Wiggin write for The Daily Reckoning of the Coming Correction they envsion. A particularly salient bit:
What was wrong with our parents, grandparents, and long-dead ancestors? Why weren't they smart enough to realize that they could have a brand-new house with all the modern conveniences without paying for it? Why didn't they figure out that they could all get rich by buying each others' houses? But now, thank God, we are all geniuses.

The baby born when the empire began in 1913 came into the world with nothing. But he owed nothing. Now, he comes into the world owing his share of 37 trillion; that's about $128,560 with his name on it. Is he richer? Is he better off? What would the dead say? That doesn't include his share of Federal obligations and commitments that he'll have to pay, which could add $100,000 more.


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