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11/12/2004: "The National Debt Ain�t a Mortgage"

I continually to be amazed at the tolerance of the American public for the GOP�s multi-trillion dollar run up of the national debt. Sure there�s a sort of low-grade background buzz about it, such that the candidates both voiced vague aspirations about reducing the rate at which this debt is growing. None of these pronouncements were backed by credible plans, though. I�m particularly surprised at the lack of outrage by two groups: baby boomers and twenty-somethings. Admittedly the latter doesn�t think much about politics in the first place, but if there is any issue that should get them going, it�s this one. The reason is obvious � a huge percentage of the taxes they�ll pay over their working lifetimes will be burned up in interest on the national debt. Interest is already one of the largest components of the budget, and has the distinction of being the only item that cannot be reduced by legislative action. It�s also the most component most at risk for explosion, a risk that we can do nothing to mitigate. The size of our monster interest payments are directly related to the willingness of foreign countries to buy our T-bills. For example, Japan owns trillions of dollars worth. Should they decide that they have too many eggs in the Bush basket, they could precipitate a disastrous deterioration in the amount of taxes needed to keep the lights on, and we wouldn�t be able to borrow our way out of that problem. Why do people yawn when experts talk about the debt/deficit? I believe it�s because people are already used to be in debt up to their eyeballs. So what if the national debt is equal to three times the annual budget? That�s not much different from a home mortgage, and if a person can tolerate that much debt why can�t the government? The answer is simple: the national debt ain�t anything like a mortgage. For one thing, you can�t run a deficit with a mortgage � the payment is always high enough to pay off the mortgage in a certain period of time. The major difference, however, is that a mortgage involves accumulation of equity. Mortgages exist to allow you to live in a real asset while you pay for it. There is no real asset associated with the national debt. It represents government services that were enjoyed by a particular group of citizens along the eternal timeline of US history, a group that just wasn�t up for having to pay for these services. The only way for the payments to end is for some group of citizens on that timeline to bear a sacrifice equal to the joy experienced while the credit card was being run up. In a moral world this would be the same group of citizens that experienced the joy. This not being a moral world, the most likely outcome will be that the short-term joy we�ve experienced over the last 20 years will be balanced by a much larger bounty of pain. This pain will be borne continuously far, far down the timeline, as the US government�s primary activity becomes collecting the taxes needed to feed the interest tapeworm.