America’s Defining Fiscal Moment?
America is facing a defining moment in its history. The United States is fiscally bankrupt and unless it makes some fundamental changes it will decline as a great power. Other countries will not only take its place in the world but will also dictate much of its future.
Any one who looks at the amount of debt we owe and the obligations coming due in the future understand we do not have the money in hand and currently owe more than we can pay. President Obama’s proposed budget for the next fiscal year nearly doubles the current debt position.
No one with an ounce of fiscal sanity can stand by and watch this train wreck about to happen without asking serious questions about the future of the country. Entitlement programs such as Social Security, Medicare and Medicaid are unsustainable. Promises made to a generation of Americans cannot be met without the United States government going deeper in debt to other nations who are willing to finance our profligate spending patterns.
China, Japan and Saudi Arabia have been willing to buy our bonds and treasury bills, in effect loaning us money to finance what we cannot afford. They hold our future in their hands. Like any bank or lending institution they can call that debt by demanding payment. If you cannot pay you have to return the goods or declare insolvency. For an individual this is bankruptcy. For a nation it can be economic servitude.
What it means for the individual
When we speak of trillions of dollars of national debt it is hard to really picture what that means. The Wall Street Journal carried a recent story that gave an illustration in terms that brings this subject home to the kitchen table. Freshman Republican Congressman Mike Mulvaney explained to a group of his constituents just how serious America’s debt problems are. “It’s much, much worse than I had expected.”
“Picture, he suggested, a family of four with an income of $46,000, annual costs of $78,000, and a credit-card debt of $281,000. That drew a gasp from the audience of mostly older voters. The figures are roughly proportionate to federal government revenue, annual outlays and the accumulated national debt, he said.” (Wall Street Journal, April 1, 2011)
I think we all know what that would mean if you were sitting around your kitchen table. The only solution would be to file bankruptcy. Sell your assets to pay what you could to creditors and hope for a new start.
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