Why is the national debt out of control?

[FRED]

Why is the national debt out of control?
October 3, 2006 (John W. Schoen - MSNBC)

For the answer, look no further than the voting booth in November

With the federal government beginning a new fiscal year Monday, the national debt now stands at about $8.5 trillion — or about $540 billion bigger than it was a year ago. Like a number of readers, Charley in Alabama wants to know: who's to blame for this big pile of debt? And how are we ever going to clean it up?

The Republican Party has been the party of fiscal conservatism. Why now is the Republican administration willing to increase the national debt? Will the national debt eventually have to be paid?
— Charley, Magnolia Springs, Ala.

Yes, just like your credit card, the national debt eventually has to be paid. And, just like your credit card, the interest has to be paid now.

But the blame for this mess is shared by both political parties. Now, with midterm elections approaching, you have an opportunity to fix the problem — by choosing a candidate that supports the tough decision process that a solution will require. (More on how to do that on the next page.) And if you don’t vote carefully on this issue, you, too, can share the blame for the debt mess.

AntiSpin: None required. This piece is spot on. It's an excellent primer to send to your friends who don't read iTulip...

The problem starts with the government not being able to live within its means — just a like a shopaholic with a shiny new credit card and an untapped credit line. To fund this overspending (aka federal budget deficits), the U.S. Treasury makes up and sells a fresh batch of IOUs every quarter. Then it uses the cash from the sale to pay off old Treasury debt that's come due and keep up on the interest payments on the rest of the paper that's still out there.

...and in no uncertain terms that when you go to vote this November, you are voting for either the Hard Way or the Harder Way. Listen to candidates that understand the issue and are willing to act as statemen (and women), for the good of the nation, across generations, rather than politicians who are in it for the short term.

(Contributed by Louis)

[jk]

Re: Why is the national debt out of control?

corporations have been fixing up their balance sheets this decade, while consumers have been fattening theirs. if consumers can no longer draw on the housing atm, i suppose there is plastic, but that gets tapped out real fast with 20%+ interest rates. we've been witness to the privatization of risk- 401k's instead of defined benefit pensions, for example, and the end of long term employment with job security. we must now have the socialization of debt - federal deficits are going to have to expand mightily to give the consumer time to reduce his debt burden. if "the hard way" involves more saving by individuals, what on earth will keep the economy going in the immediate future? federal spending.

[Uncle Jack]

Re: Why is the national debt out of control?



http://img163.imageshack.us/img163/6...hcom500qw9.jpg

http://www.thebudgetgraph.com/about.html

[BK]

Re: national debt out of control - Look to your left and right

Politicians are merely a reflection of the Citizens.

Look at local spending issues?
For example, my local town is planning on buying a small grassfield airpot (its been an airport for 50 yrs) and converting it to Soccer fields.
Result: Increase costs for the town and say good bye to a Tax paying business.

Another local town is pushing a Automotive parts store out of town because the building is historic. This builiding is being converted to luxury Condos and an underground garage. This town no longer has a place to by auto parts.
Result: Increase costs (more students for the schools) and loss of a local employer and the property will be less valuable in the future because it is no longer a Commercial property.

In many american towns dirty Commercial businesses are being pushed out and replaced with residential or town/city use. Taxpayers happily get behind these changes for the sake of the Children or Community renewal. My fellow citizens don't understand that Commercial business makes a piece of land more valuable (no students to provide an education for) and City/Town use means NO FUTURE TAX RECEIPTS (plus increased costs to maintain the property).

So, look at all the People lined up to vote in November - that is were the problem lies. These folks are the ones looking for their free lunch and they don't seem to know that there is NO FREE LUNCH!

[Ed]

Re: Why is the national debt out of control?

A basic and very large shortcoming of our system is: the priority of our elected officials is reelection. And it's human nature: clearly transferring some $ from person X to person Y gives a larger negative memory in X than the positive memory in Y. Educating people re. the common good has quite limited consistency with the reelection priority.
And the news media are overwhelmingly funded by paid advertising -- the greater the head count of readers/viewers/listeners, the greater is such funding -- so educating heads had better promote the head count: NOT likely.

[DemonD]

Re: national debt out of control - Look to your left and right

Politicians are merely a reflection of the Citizens.

This was (somewhat) true from 1993-2000.

It has not been true at all since 2001-current.

What I find interesting is sometimes when I hear political commentary, I hear people defending US involvement in Vietnam, and that the US should have stayed there longer! This is used to support US involvement in Iraq.

Most recent CNN poll has 61% of Americans disapproving of the war in Iraq.

Also, elections many times are a product of marketing and money, and in the US House and Senate, incumbancy (which often involves garnering more money for re-election war chest).

http://www.opensecrets.org/bigpictur...asp?cycle=2004
http://www.opensecrets.org/bigpictur...&Memb=H&Sort=D

BK - to your other point about parks and public spending, people act in their own self-interest. That is what we do, it is human nature. I agree that buying an airfield and making it a park is a very short-sighted thing to do monetarily, but won't that place make a really nice, safe place for families and dogs and kids to go? And less buzzing overhead? And less chance of a plane falling into your roof?

Of course I'm sure the pilots, staff, and aviation folks would not approve of a deal like this.

And while that is just the small stuff, we haven't even begun to talk about an aging baby boom population that is soon to be drawing from Medicare, Social Security... and older people tend to vote more so they will protect their OWN interests...

It can be mind boggling at times.

edit: Just to finish, it is encouraging that there are Citizens that DO care about our national debt, and we do our best to vote for those representatives and issues that do look at the long-term health of our society. Sometimes it is difficult to find the right people to vote for, though, but fortunately the information is out there for those who choose to make informed decisions about their votes.

[BK]

Re: national debt out of control - Local spending is out of control

DemonD,
I DISAGREE with your point that things are different since 2001 ( lets put the war aside- and focus on how locally controlled communities spend their money).

1. How Many new playgrounds or Skateboard parks are in your local area - The Wise local voters have been happy to have all these Perks rolled into Longterm Debt financing of schools and other assets -(I have a Preschooler and I frequent parks)

2. How many new schools are being built in the Towns that surround you - Every community in USA is rebuilting/replacing all the Schools in their Towns at the same time?
If you have two cars in your family do you replace them both at the Same time?

3. Towns that save for Capital Improvements in USA (Zero I would imagine - sorry no data to support). My father-in-law tried to convince is local town to start saving for Capital Improvements and they practically laughed him out of the meeting. Communities don't need to Save - Financing is SMART rules the Day!
I owned a home next to a school - the school department Did ZERO preventative maintenance on the exterior of the school. It was the best education for me on how local government cares for the Assets of a Town.

4. New Trucks and Cars for Town/State/Public Authority - have you noticed the number of new trucks that Government employees drive. Compare that to the Trucks you see driven by workers for utilities (no surprisingly, the utility companies make their employees drive older Trucks - just my observation). For folks in Massachusetts - drive down the Mass Turnpike - the oldest Truck owned by the Turnpike is 2 years old - meanwhile there are financial troubles at the Turnpike.

5. In the Old'n Days the way that self interested humans protected their futures was SAVINGs. I hope it comes back again.

Its always easy to blame the folks in Washington-DC. But, they are a reflection of the spending that is happening in every town and City in the United States. It won't be until we see some major Municipal or State bankruptcy that the tide will change.

[DemonD]

Re: Why is the national debt out of control?

BK - It's hard for me to be non-partisan and non-biased, and in this case I cannot. I see exactly what you are seeing, and it disturbs me greatly. I'm going to leave my personal political feelings out of this for the most part, but let's just say that I think USA, Inc. was run much much better in the 1993-2001 period than the current period.

[bart]

Re: Why is the national debt out of control?

I fail to see any significant difference at all between the political parties in the financial area - both have been ridiculous spendthrifts since the '70s and '80s.

Any one who thinks so needs to study these and other financial charts comparing the two - both parties are guilty.

[DemonD]

Re: Why is the national debt out of control?

Bart -

My argument is simple. Especially looking at your last 2 charts there, you can see where from the mid to late 90's, as the federal government ran a surplus, the debt was trending downward.

Insert a cut-taxes-and-go-to-war regime, and 6 years later here we are.

[bart]

Re: Why is the national debt out of control?

Bart -

My argument is simple. Especially looking at your last 2 charts there, you can see where from the mid to late 90's, as the federal government ran a surplus, the debt was trending downward.

Insert a cut-taxes-and-go-to-war regime, and 6 years later here we are.

I do understand what you're saying, at least I hope so.
But you also have to take into account, during that mid/late '90s, many other things.

The CPI adjusted numbers make that surplus a lot smaller, none of the charts take SSI into account (which make the apparent surplus completely disappear), the opposite party with a majority in Congress was a factor (different than 1992-6 being my point), a huge money pumping operation going on via Greenspan and the "1995 miracle" to which EJ has referred and which increased revenues hugely through capital gains receipts, etc.

And then there's this beaut - its simply a chart showing the difference between what the administration says the defict is, with the actual change in total gov't debt. There was a huge discrepancy from 1996-2000. In other words, that publicized surplus simply was yet another political lie and dose of statistical Kool Aid/BS.





I'm honestly not trying to be politically hostile to any party and hope I'm not coming across that way - my first post seems pretty intense after a re-read - but at least I hope you now see where more of my view came from on both parties being about equally culpable in the financial & economics area.