Forgive us our Deficits

As 2010 unfolds, many countries are confronting a public deficit crisis of disturbing proportions. Since 2008, countless politicians have underscored that a cavalier attitude to debt on the part of Main St. and Wall St. contributed significantly to the recent financial crisis. It’s therefore ironic to observe these contemporary preachers of thrift plunging developed economies into an abyss of public liabilities.

In 2009, for example, the Obama Administration spent more money on new programs in nine months than the Clinton Administration did in eight years, thereby increasing America’s annual deficit to $1.4 trillion.

To be fair, the federal government’s annual deficit rose steadily under the Bush Administration. Indeed, this spending-pattern helped create an atmosphere which made it easier for politicians to push through the stimulus packages of late 2008 and 2009. America’s long-term annual federal deficit is now at its highest level since the early 1990s. The Office of Management and Budget presently predicts that by 2019 America’s public debt will be $18.4 trillion – approximately 148 percent of America’s GDP.

In an age when political, civic, and religious leaders endlessly invoke “intergenerational solidarity,” that’s hardly a proud legacy to bequeath our children. It’s akin to forcing them into a form of indentured servitude to us which will last long after we’ve gone to meet our maker.

A former American Vice-President once reportedly stated: “Deficits don’t matter”. Actually, they do. For one thing, much economic policy of the 2010s is going to be dominated by efforts to reduce government deficits. This assumes, of course, that our political masters have retained some lingering sense of fiscal prudence. Here the Federal government’s recent lifting of borrowing limits for financially-disgraced Fannie Mae and Freddie Mac does not inspire confidence. Nor does Congress’s quiet Christmas Eve raising of the federal debt limit to $12.394 trillion.

Deficits also matter because reducing them presents us with difficult choices. One is to raise taxes. This, however, reduces incentives to create wealth. A second is simply to inflate the deficit away. But apart from poisoning a currency, inflation discourages savings and negatively impacts those on fixed incomes: i.e., the elderly and the poor.

Another option is to reduce government expenditures. But politicians would then not have as much taxpayer money available to pay off the various interest groups that support them during elections. Unsurprisingly, they’re not so inspired by this, all protestations to the contrary.

Naturally, it’s very easy to blame politicians for the deficit nightmare confronting America and other developed countries. But one of the Bible’s most useful pieces of advice is to “remove the wooden beam from your eye first; then you will see clearly to remove the splinter from your brother’s eye” (Matthew 7:5).

It’s true that many politicians in America and Western Europe consistently vote for public expenditures not covered by revenue. But they are not in office because they inherited their positions. They hold public office because many of us vote for them.

Some of us do so because we’re happy for them to use their legislative powers to make others to pay for particular projects that we can’t or won’t pay for ourselves. It’s part of an unspoken agreement between politicians and the rest of us. We want to have our pork and eat it too.

Others vote for such political candidates because we actually want the state to take care of us rather than assume responsibility for ourselves and our families. Yet others vote for deficit-enhancing politicians because we think we can have mutually-exclusive things, such as countless entitlement programs and low taxes.

And then there are those of us who vote on the strange basis of identity-politics or emotionally-satisfying-but-content-less slogans like “Hope and Change,” while ignoring the woeful fiscal records of politicians of all parties espousing such mottos. The same politicians habitually make absurd promises to solve all our problems, and we go along with it. In short, we routinely throw our reason out the door and succumb to messianic sentiment and utopian daydreaming. That’s what adolescents do – not mature, responsible citizens.

At some point, however, the irreconcilable must be reconciled. All those promises and pork-barrels must be paid for. Neither raising taxes nor cutting expenditures are electorally-palatable solutions for most politicians. So why not run large deficits?

But in the end, out-of-control deficits matter because they tell us something about who we are, what we want, and our unwillingness to make the necessary sacrifices to achieve our goals. Ultimately, it’s not just politicians who need to be held accountable and repent for our deficit crisis. It’s us.

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  • http://catholichawk.com PrairieHawk

    I say we, the citizens of the U.S., take responsibility for the national debt. First we fire all the career politicians in the next election, and put in people who will balance the budget. Then we develop a plan to pay the debt off in 10 or 20 or 30 years: We divide the national debt by the total number of people in the country, and each of us agrees to pay extra from our household budget to go toward debt reduction. Either we can work extra hours, or we pay higher taxes on the hours we already work, or we use up savings.

    These are the only ways the debt is going to get paid off. It isn’t going to magically just “happen”, especially if we have a political class with the current mindset. And if we don’t pay it off, the nation is going to end up repudiating all or part of the debt when interest payments become unsustainable, and the whole world economy is going to be wrecked. That’s my solution. Any takers?

  • Cooky642

    PrairieHawk, your idea sounds good in a utopian sense. What about those of us on small fixed incomes with no savings? What about those (many, now) who work for minimum wage or less and have families to take care of? I only know 2 people in my entire extended family who have the kind of disposable income needed for your idea, and they got it by being “careful” with their money.

    It gives me hope that people are actually thinking about this problem. Perhaps some equitable way can be devised, but I’m not a “math” person and so can’t think of any other options. But, I encourage you to keep thinking. SOME one has to!

  • http://catholichawk.com PrairieHawk

    Cooky,

    You’re right, there are huge problems. I live on a small fixed income myself and have no idea where any extra money would come from. But we need to talk about this problem like it’s solvable or there aren’t going to be any solutions. I think CatholicExchange would be a good place to start a conversation and I invite others to jump in.

    Anthony

  • goral

    As the title states, referring of course to spiritual debts so it will be and has to be with pecuniary debts; they will need to be forgiven. This will not happen in a spirit of friendship and clemency but rather in turmoil and collapse.
    It’s the way of greed, mismanagement and a lack of discipline. It’s the way of the world and our culture is no exception. We just have more money to be more wasteful.
    Ex. our banking bailout. – Utterly criminal!

    Are there any takers? PrairieHawk asks.
    I’m afraid there are, way too many more than givers.

    Pardon the twist.

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