[COLUMN] Forget energy; debt is killing us

"The Decline and Fall of the American Empire."

I can imagine that book title adorning some future bookshelf.

Am I crazy?

I am certain that, if you told a citizen of Rome on Sept. 3, 476, that the empire was going to collapse, he or she would have laughed you right out of the Forum Magnum.

Of course, Odoacer deposed Emperor Romulus Augustulus the next day and the rest is history. In reality, no specific event marked the end of the Roman Empire. The fall was most likely a gradual transformation stemming from loose fiscal policy, military adventurism, welfare, high debt and excessive defense spending.

That is the likely course for the end of the American Empire. We will not even know it happened until long after the fact.

Perhaps the best indicator that we are in decline is the national debt.

Thomas Jefferson, in many of his letters, warned against government debt. In several letters, he warned that an overbearing national debt would lead to the collapse of liberty and to what philosophers referred to as the bellum omnium in omnia, or, roughly, the war of all against all.

The national debt is a phenomenal $9.54 trillion. That comes to about 65 percent of the U.S. gross domestic product and $31,309.88 for every man, woman and child in the country.

When George W. Bush took the oath of office on Jan. 20, 2001, the national debt was $5.73 trillion. With the debt increasing at the unbelievable rate of $1 million a minute, it could reach the $10 trillion mark by time Bush leaves office Jan. 20, or shortly after.

However, that figure is not even the real debt.

Because the U.S. government does not use proper corporate accounting practices, much of its real debt is not even counted. The true debt is more likely above $110 trillion. That is because the government does not count unfunded promises such as Social Security, Medicaid and Medicare as debt.

The reason government officials give is that those programs are not really debt because they could be ended at any time and the money paid into it would be forfeited to the government.

How's that make you feel about your retirement plans?

Still, in less than 20 years, those three programs, plus interest payments on America's debt, will consume all the tax revenue the nation can expect by then.

Don't expect relief from the next president. According to a study by the liberal Tax Policy Center, U.S. Sen. John McCain's tax plan would increase the national debt by $5 trillion in 10 years and Sen. Barack Obama's tax plan would increase the debt by $3.4 trillion.

The problem with carrying such a large debt should be obvious to everyone.

It gets worse.

Japan and China are America's two biggest lenders. Great Britain is third, followed by a bloc of oil-producing states including Iran, Kuwait, Saudi Arabia and Libya. In fact, about 45 percent of the national debt is foreign-held.

Therefore, in trade and military disputes, China, as America's No. 2 lender, holds considerable influence. Foreign lenders can also dump their existing holdings outright. To lure other buyers of Washington's debt, U.S. interest rates would then have to rise sharply, throttling the nation's economy.

Perhaps it's time we stop whining about gas prices and talking about energy independence and get our financial house in order before China, Iran and Libya foreclose on America. Fiscal irresponsibility is ruining the American experiment in self-government. Financial independence is more important than energy independence.

The first step is to force the government, through a constitutional amendment, to pass only balanced budgets. Then we must institute a plan and timeline to pay off our debt. Finally, we must limit all future borrowing to times of national emergency (war) and that debt must be paid in full within 20 years, as Jefferson suggested, through increased taxation, the threat of which would limit borrowing to real emergencies, not imagined or contrived ones.

"We must not let our rulers load us with perpetual debt," Jefferson wrote in July 1816. "Taxation follows that, and in its train wretchedness and oppression."

That is the future of America if we do not act.

E-mail to a friend |

category | Column
author | Lucente

Trackback

There are currently no trackbacks for this item.

Use this TrackBack url to ping this item (right-click, copy link target). If your blog does not support Trackbacks you can manually add your trackback by using this form.