Monday, July 25, 2005

Growth in the U.S. Federal Debt

Growth in the federal debt bothers me. I believe that the federal government should not be competing with the private sector for resources. Yes, there is the argument that these are unusual times with 9/11, the war on terror, and homeland security concerns. But even prior to 2001, the U.S. was sitting on a $5.9 trillion debt – debt that was accumulated in part because of the unusual events of the 1980’s such as the need for tax cuts to stimulate the economy after the 1981-82 recession, the Cold War (defeating the evil empire), and prosecuting the first Gulf War. Would American citizens have been as accepting of the need to borrow then if they knew of the possibility of the events of September 11, 2001?

By allowing our government to borrow significant sums today, we are saying that the problems of today are more important than problems that might emerge in the future. In ten years, will the United States be able to face the threats imposed by a new world super-power if we are sitting on a federal debt equal to 100% of GDP? Even if you don’t buy that argument, by allowing our government to borrow, we are allowing our elected leaders to provide us with politically attractive tax cuts without taking responsibility for politically-distasteful spending cuts. Elected leaders basically saying that we can keep more of “our” money and also continue to enjoy all the services we have come to expect from our public sector. We just send the bill to our children.

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