Thursday, March 11, 2010

Diamond Column: How Much Debt is Too Much?

Republican Senator Jim Bunning is our country’s latest political villain. Last week, Bunning single-handedly blocked a bill in the Senate that would have extended unemployment benefits and health benefits for jobless Americans. Bunning argued that the bill would add $10 billion to the deficit, and refused to allow it to pass until Congress made other cuts to pay for it. By the time Bunning was convinced to back down, tens of thousands of Americans had already seen their benefit payments interrupted.

So he’s kind of a jerk. But he does have a point.

The late Senator Everett Dirksen is said to have joked, “A billion here, a billion there, and pretty soon you’re talking about real money.”

This year, the government will spend $1.6 trillion more than it takes in. Senator Pat Murray wants to add $1.5 billion to that – to pay for a summer jobs program for teenagers. What’s the big deal? It’d only increase the deficit we already have by 0.1%.

How’s this for “real money”? The public debt of the United States stands at over $12 trillion. The Congressional Budget Office estimates that we will add $6 trillion to that in the next decade. By 2020, the entire national debt will equal two-thirds of our gross domestic product. And if you count the benefits the government has promised to pay to future retirees, then our national debt already stands at $56.4 trillion. That’s more dollars than there are miles between the solar system and the nearest star.

Facing this monster, Bunning’s cry “Enough is enough!” seems a little more reasonable. Sure, he picked the wrong battle. But no one else in our government seems to be taking this seriously. “We’ll deal with it after the recession is over,” they say. Just like President Bush said, “We’ll deal with it after the war on terror is over.” Just like Reagan said, “We’ll deal with it when we win the Cold War.”

What happens when these numbers get so ridiculous that people lose their faith in the credibility of the U.S. government, and stop lending to us and investing in us? When the lack of favorable lenders means we can’t shove our debt off into the future anymore, and it all comes crashing down at once?

Now is the time for our politicians to start talking about solutions, like new forms of taxation, limits on benefits, and getting rid of subsidies to big business. Fixing this problem will take a lot more courage than grandstanding on the Senate floor, but that’s the kind of leadership this country needs right now.

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