Early in 2008, I was very encouraged that we were about to do something about about the growing national debt. There seemed to be a growing consensus that the debt (at that time) was too high and growing too quickly. A consensus was growing that we need to come together to make hard choices in limiting spending to be closer to the whatever level is met after raising revenue collections to their sustainable limits.
Personally, I may have an outdated notion of debt as being something that eventually has to be paid off. I grant that this is a minority position even for personal finances. The more dominant view is that debt is a benefit we would be foolish to avoid. The limit is the affordability of the servicing of the debt. By 2008, this view had become accepted wisdom after a decade or more of the promotion of zero down, interest-only loans. To not be in debt was a foolish thing.
Granting the irrelevance of debt, by 2008 I got the mistaken impression that there was a consensus that we needed to control the deficit for the purposes of not exceeding the serviceability of the total debt. I also may have been mistaken that there was an consensus that there was a huge off-the-books debts in terms of unfunded liabilities in the form of promises made to individuals in the form of social security, medicare, defined benefit pensions.
In contrast to the additional unfunded liabilities of the promise of a safety net of disability, unemployment benefits, food stamps, and other forms of needs-based cash benefits, the promises made to the individuals are contracts in the form of deferred earnings for work done. These expenses are not counted in the official debt but we have an obligation to pay them. The monies for the disbursements of deferred earnings have to come from revenues raised during that same time period when other individuals are doing the earnings.
There may be good reasons not to call this debt. But as I mentioned earlier, there is a consensus that debt doesn’t really matter anyway. What matters is the obligations for servicing the debt.
Debt doesn’t matter. What matters is the servicing of all obligations. This money must from current revenues.
I thought we were at a point where we would finally get a government to tackle these problems. This was during the primary season well before we knew who would be running. Whatever government would emerge would have some mandate to lead the country into making hard choices with an eye to what it will mean for our future.
Another thing that was apparent was the increased interest of the young generation to get involved politically. I perhaps naively thought that they would have a heightened concern about the implications on their future of their obligations to service obligations. The debate about budgeting definitely needs their active attention and participation. They seemed energized and increasingly energized as the year progressed.
Jumping ahead to the election, it was an even more exciting time. We found a government that energized the young people to tackle the problems of the nation. Although it was clear that fiscal responsibility had to compete with other issues, at least there was an energized base who could provide the hard work to get things done, one of those things was fiscal responsibility. Unfortunately, fiscal responsibility had to be put on hold because there was a financial crisis, but its time would ultimately come because the people most affected, the young, were energized.
Instead of getting down into doing the hard work the times demand, we fell into a spell that said we can leave our fates to the hands of the government. This spell is that we are so blessed by the greatness of the nation that we personally do not need to do anything. The greatness of the nation will inevitably prevent doom.
This spell freed us to direct our actual efforts elsewhere. We chose to spend our energies on a different issue. The issue we chose was access to health care by reforming health insurance. Health insurance does not solve all problems about access to health care, but it was something that could be passed into law. This effort led to complications that absorb more of our efforts to make even that modest goal work.
Now, not only are we not certain of health insurance reform will meet its modest goals, but this new program is now a new obligation for government disbursements.
Since 2008, the deficit spending increased far beyond what was expected and then stayed there. Debts are increasing and obligations are becoming due. The collective government of citizens, representatives, and bureaucrats sees no urgency to address any problem with the servicing of obligations despite lack of revenue.
It now seems that we have concluded that we can service even our obligated spending by adding it to the debt. We are fully in the spell that the belief in the greatness of the country itself will carry us through. The greatness of the nation has shown itself to be some deity who has us as its chosen people.
In the six years since 2008, we lost a once per generation opportunity.
The obligation-servicing issue remains but it will need to wait for some future period when a new convergence of the urgency of the issue and a newly energized population can allow for hard work to be undertaken.
Meanwhile, we can relax and enjoy the comforts of the benevolent greatness of the nation.