BY RUSSELL TURNER
MAXED OUT
Like many other Americans I like the convenience of having a credit card. As long as I keep the monthly balance paid the card can be a very good tool, but you must have the ability to use discipline in your spending. All credit card companies will give you a credit limit when they issue you a card; if you prove yourself to be a good steward of the card the limit will be increased. On the other hand if you fail to make your monthly payment and keep on spending you will become maxed out and your credit will be cut off. As you can see with this scenario it is the lender who decides if you deserve a higher limit, if it were up to the card holder too many people would just keep raising their debt limit even though they don’t have the ability to pay what they already owe. In a few short weeks our federal government ’s credit card will be maxed out and Congress will again raise the debt limit.
Our government is addicted to debt; since 1960 Congress has raised the debt ceiling 78 times. There are basically three categories of government spending. First is what’s called Discretionary Spending. This is what Congress debates about endlessly—deciding how much money each department of government will receive every fiscal year. Then there’s the Mandatory Spending. These are programs like Social Security, Medicare, etc. which are set by law. Congress doesn’t have to debate anything with these programs; the money just automatically gets sucked out of the Treasury, just like your monthly mortgage payment. Last is Interest on the Debt, which, sadly, is so big that it has its own category.
The United States Government collects a huge amount of taxes from the citizens, but the budget for Mandatory Spending and the Interest on the National Debt consumes all of those tax revenues. In other words, you could eliminate nearly every department of government—Homeland Security, the State Department, etc. and the US government would still likely be running a deficit. The supposedly richest country in the world regularly borrows the maximum amount of money as permitted by its own law. Now Congress must pass a new law that will allow them to borrow more money. Right now the national debt is 18 trillion dollars (double what it was just 10 years ago), if you add the government’s own estimates of the long-term shortfall in its major mandatory entitlement programs you are looking at more than $60 trillion.
We Americans are in serious trouble. This debt is bad enough with near 0% interest rates; when those interest rates start to climb servicing the debt will become next to impossible. Default will become a very real possibility. The most likely victims will be the citizens who rely on the government to maintain a sound and stable currency, and their obligation to provide retirement income from the Social Security program that people will have spent their entire lives paying into.
It is sad that most people in this country aren’t concerned with the National Debt. Just like using a credit card, one minute you have plenty of money then one minute after it is maxed out and you are broke.
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