August 13, 1999 (Ira Pilgrim)

It's Your Money

It could probably be shown by facts and figures that there is no distinctly American criminal class except congress.

Mark Twain(1835-1910)

Our nation is deeper in debt than any nation has ever been in the history of the world and the president talks as if the finances of the U.S. are in the black. The buzz words are "budget surplus," which implies that we have more money than we need. A couple of weeks ago I heard the president mention the national debt. Almost no one in the government mentions it because it is a national disgrace. The only thing that a politician seems to knows or care about is how to get elected and how to keep his job. The welfare of the nation is always a secondary consideration.

Let me start this tirade with a bit of simple arithmetic. As of July 17,1999, the national debt was 5.63 trillion dollars (exactly $5,630,527,225,977). For every trillion dollars ($1,000,000,000,000), the interest, at between 6% and 8%, is about 70 billion ($70,000,000,000) dollars per year. Over a ten year period, that comes to 700 billion ($700,000,000,000) bucks per trillion of debt. Politicians like to talk about ten year periods when times are good, as they are now. The interest this year on the national debt is about 394 billion dollars($394,000,000,000). The annual defense budget is around 260 billion dollars($260,000,000,000). Therefore, the interest on the debt is 134 billion dollars more than the defense budget.

Despite the so-called budget surplus, by the time this column is printed(August 13,1999; 27 days) the national debt will have increased by about eight billion dollars. This is a slower growth rate of the debt than I predicted 5 years ago(10/28/94 Fiscal Irresponsibility); but the fact that it is growing at all, rather than shrinking, during the largest economic boom in history is testimony to the fact that we have elected a flagrantly irresponsible group of representatives. I say this because should we have a recession, which is very likely, essential programs would have to be sacrificed to pay the interest on the debt, or we could go much deeper into debt. At some point this house of cards will collapse.

What does that interest buy for us? Absolutely nothing! It just puts tax dollars into the hands of rich people, foreign or domestic, who hold treasury bonds. About a third of the interests goes to people outside of the U.S. It essentially takes money from the middle class and gives it to the rich.

Despite this, the Democrats are talking about more spending and the Republicans talk about tax cuts. The Republican congress has passed a tax cut bill which the president may veto. He may veto it because he wants to spend more money rather than cut taxes. Both parties want to "save Medicare." Nothing will help Medicare if we have a severe recession and the nation goes bankrupt. Where will Medicare be then?

As Allen Greenspan has pointed out, projected budget surpluses are not money; they are guesses. It is generally a good policy not to spend money that you don't have. That doesn't bother the politicians in either party. Greenspan seems to be the only member of our government who is concerned about the welfare of the nation.

I propose a very simple plan for using the budget surplus. Spend none of it and have no tax cuts. When the debt has been paid off, there will be more than enough money in the treasury for tax cuts and to finance any projects or boondoggles that congress and the president can dream up as a result of not having to spend a fortune on interest on the debt. We could save Medicare, which is in no real danger, and we might even have enough money to fight another world war without going into hock as we did with the last two.

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