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The Nation's Pulse
Indentured Grandchildren
If you are blessed, as I am, to have grandchildren, you may not
realize that they are more than just treasured children of your
children, a gift beyond measure. They are also indentured
servants who will be paying off your cumulative national debt for
a good part of their lives on earth.
According to the Congressional Budget Office's (CBO) annual summer budget update, our national debt "which was as low as 33 percent of GDP in 2001, would reach an estimated 54 percent of GDP this year and grow to 68 percent of GDP by 2019."
Writing on his blog yesterday, CBO director Douglas Elmendorf, the same fellow who blew the whistle on the Obama administration's faulty estimates of the cost of its health care plans and was rewarded with a friendly visit with the President at the White House, says "the federal budget deficit for 2009 will total $1.6 trillion, which, at 11.2 percent of gross domestic product (GDP), will be the highest since World War II [emphasis added]."
A weak economy and elevated spending is the cause of this deficit figure. "The deficit has been boosted by various federal policies implemented in response, including the stimulus legislation and aid for the financial, housing, and automotive sectors," says Elmendorf.
And it gets worse beyond the ten-year budget projections. Director Elmendorf says that "the nation will face further significant fiscal challenges posed by rising health care costs and the aging of the population. Continued large deficits and the resulting increases in federal debt would, over time, reduce economic growth."
"Putting the nation on a sustainable fiscal course will require some combination of lower spending and higher revenues than the amounts now projected," he says. I find it somewhat consoling that he mentions only lower spending and higher "revenues" and not taxes per se. Unfortunately, the idea of pursuing something like a dynamic, growth-oriented supply-side approach with budget restraint and tax cuts for individuals and corporations, now the highest in the free world, is the farthest thing from the minds of either the Hill or the White House.
The CBO does not mention the distinct possibility of runaway inflation, but director Elmendorf is cognizant of the looming entitlement debt bomb as evidenced by his mention of our aging population. These are additional clouds on the horizon of our children and grandchildren. There are also massive liabilities, presently kept off-budget for Fannie and Freddie, as recently pointed out by the Wall Street Journal.
And you thought those toddlers were just cute. They are the ones who are going to pay for this generation so it can party like it's 2009.
Peter Orszag, White House Budget Director, released his own report just before CBO released its own, no doubt seeking to get ahead of the story. Orszag confirmed that the stimulus package was likely to cost "tens of billions of dollars" more than expected, resulting in next year's budget skying to just over $1.5 trillion, a figure only slightly less than CBO's. Moreover, deficits are likely to remain elevated even after the economy recovers, averaging more than $800 billion a year through 2019 at which time the White House estimates the annual gap between spending and revenue will be $917 billion.
According to the Washington Post's Lori Montgomery, "All told, the White House predicts that the nation will have to borrow an additional $9 trillion over the next decade to finance the annual deficits, driving accumulated national debt to nearly $23 trillion in 2019 -- or 76.5 percent of gross domestic product, the highest since 1950." This is a higher percentage than even CBO calculates a decade out.
Still, director Orszag has his game face on: "I know some will say this report proves we can't afford health reform. I think that analysis has it backwards," says Orszag. "Given the long-term nature of the problem, we simply can't afford to wait."
Cannot afford to wait for what, pray tell? More taxes and debt? Here's a thought. Deal with entitlement reform and unfunded debt and liabilities first. Then "reform" health care.
My own personal hero, Congressman Paul Ryan (R-WI), from my wife's home state of Wisconsin, notes that "the Federal Government is borrowing half of its entire budget this year alone, and it is working Americans and their children, who will foot the bill."
"Today's news confirms what we've all know: Washington's spending binge has made a bad situation even worse -- driving deficits to unprecedented levels, and plunging our nation deeper in debt."
Yes, our grandchildren are now our very own indentured servants, compliments of bipartisan spending over the last decade, up to and including this moment. This legacy of debt and taxes is a sad one to leave to America's future generations to whom we all owe a much better deal than the one they are getting.
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Neil Steyskal| 8.26.09 @ 7:17AM
THE US DECLINE
He's borrowing and spending like never
To lock in his doctrines forever
(And reward his supporters, in fact).
But the President will someday come to regret
That his doctrines have crushed our children
with debt.
Does a fallen Power ever come back?
Tim| 8.26.09 @ 9:12AM
Massive inflation is the only "solution" to this man caused financial disaster.
Melvin| 8.26.09 @ 9:26AM
Always remember the Liberal mantra, "Its for the children."
Ken (Old Texican)| 8.26.09 @ 10:48AM
We can stop this right now. We must demand that every further penny that we pay IN for Social Security and Medicare........BE PLACED IN THOSE BUDGETS IN A LOCK-BOX DRAWING INTEREST!
Michael L. Hauschild| 8.26.09 @ 10:57AM
Divide that deficit figure out among the population in ten years. Not the total population, not those who are on the dole, not those who will be retired, and not those who reside here illegally. It is truly staggering; we are approaching the scientific notation era of indebtedness.
Robert Simpson| 8.26.09 @ 11:47AM
We will be fortunate if our debt reaches h of GDP by 2019. That will mean someone is still lending us money. The scary scenario is if, at some point, no one will lend us money. Then we will have to balance our budget on short notice or start printing even more money.
Louis Jenkins| 8.26.09 @ 11:47AM
We have become a nation of debtors. There's no stigma involved, it is the norm. Well I remember when being debt free was a personal goal and to be admired. Debt reduction and financial freedom was the smart thing to do. No longer! Personal finances are conducted via the credit card and who cares how it will be repaid! Federal, state, and local governments borrow without a thought as to who will be responsible for the debt or how it will be repaid. I'm not sure which came first, excessive national indebtedness or personal, but it can't last any longer. We are all on the edge of our seats to see when the teeter totter falls off the edge dragging everyone, including the financially free and the ship of fools, with it. Yes, much of the borrowing is for the children or the entitled, but the future has not been improved in the least. It needs to stop!
Al Adab| 8.26.09 @ 11:48AM
This is exactly what so many have been pointing out for so long (since 1964 by my memory) when our lives are not our own due to debt service, we are slaves to another. A government that indentures its citizens is no longer legitimate. Are we to become serfs of Washington? Even now I spend my days wondering how I can ever apologize to my grandchildren. We did not fight enough for Liberty, theirs and ours.
Old Tex, I'd much rather have the SS deduction left in place, but put in my personal IRA till I'm say 59.5 or maybe even 62. What would I be worth then? Literally enough to pay for retirement AND health care from my own resources. And I would no longer be a ward of the government but a free, sovereign individual. Now there's a plan.
Rocco| 8.26.09 @ 12:31PM
Ben Franklin is said to have written: "When the people find they can vote
themselves money, that will herald the end of the Republic."
Well, we've done it the liberals' way for over 150 years, and this is what
we've come to. Time to go back to our founding principles, and really, we
will have to do it in a ruthless and focused manner.
True constitutional reform is this: eliminate the one-man-one-vote
provision - it's been a disaster and goes along with what Franklin said;
restore the property owner qualification to vote - only those who have to
write a tax check understand the implications of the economic idiocy coming
out of Washington and can arrest it; repeal the 17th Amendment; alter the
24th Amendment (poll tax was used as a device to keep blacks from voting -
leave that in the Constitution); repeal the 26th Amendment - that was passed
because of the Vietnam era draft; there is no more draft, and the recent
election showed the folly of allowing immature twits the vote.
Responsibility comes with rights. The pendulum has gone too far to the
"rights" end; time to emphasize more responsibility.
Now, libs will read this and get apoplectic. My answer to that is: tough
shit. They've had it their way for damn near a century and it's ruining
this country. To echo their hero, the new messiah, they created the mess,
so they ought to just shut up, get out of the way and let the adults clean
up their mess.
Tony in Central PA| 8.26.09 @ 12:49PM
Anybody remember how the Democrats were painting themselves last fall as the Party of Fiscal Responsibility ? Anything for a vote, I guess. Of course, getting people to swallow this line was made so much easier by the inaction of the GOP on the problems of deficit spending, runaway entitlements and growing debt during most of the preceding eight years.
Now we're all stuck. Our nation is in a very fragile condition economically, and will be for a very long time to come. The default government solution for every conceivable problem of deferring short term pain by acquiring long - term debt will no longer work.
Old Cowboy| 8.26.09 @ 12:57PM
Al Adab is right. We sold our children into slavery for the sake of a false security promised us for votes. We can never apologize, and frankly they should never forgive us. Maybe our error can bring them a return of freedom. I fear for their lives and futures.
Alan Brooks| 8.26.09 @ 2:55PM
this is as sobering as you can get.
Ron Schoenberg| 8.26.09 @ 3:54PM
I understand the feeling. I felt that way when Congress appropriated 25 billion dollars in the 80's to rescue the Savings and Loans. 25 billion was a lot of money in those days and I was convinced that it would drown our economy in debt for decades.
That didn't happen however. The increase in our productivity after that time took care of the debt without difficulty. It's as if it had never happened.
I think the same thing is going happen this time. The economic engine will be new discoveries in energy production. The U.S. has always been a fount of innovation and I believe the huge debts caused by the Iraq war, the Bush tax cuts, the stimulus and health care will disappear into a new energy economy.
Dan Quail| 8.26.09 @ 5:01PM
Uh, Ron, tax cuts doesn't cause debt...that would be spending. It was tax cuts that increased that productivity in the '80s that absorbed that 25 billion.
Pete| 8.26.09 @ 5:32PM
Where was your outrage when King George gave Lord Paulson and his bankster friends $750 billion last September? Where were you when King George took us to war spilling our blood and treasure all over the Middle East.
Obama's policies are simply a continuation of a our leaders taking us down the wrong path. Repubs/Dems-it's simply a false paradigm. They are two heads of the same beast. So why don't you take your BS to the outhouse and write something that exposes the reality of those really in power in America.
Al Adab| 8.26.09 @ 5:51PM
Pete,
Actually most Conservatives went ape over the bailouts, deficit spending and social programs of the GOP. Please don't confuse Conservatives with the GOP. While Conservatives chose the GOP as their vehicle and brought them their only success in 1980 and 1996 the two are not synonomous. The Conservative movement stands apart from the majority of Republicans, the so-called RINOs.
Len| 8.26.09 @ 6:16PM
No one generation has the right to bind another generation. It's that simple.
Jackie Boy| 8.26.09 @ 7:48PM
Looks like Obama is intentionally trying to destroy the country.
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Wesley Mouch| 8.26.09 @ 10:25PM
Any analysis of our finances is always scary, when it comes to future obligations. But have you considered that because the amounts are so huge & so obviously unpayable that, through default, our children will not be bound to pay anything. The math is clear, the debt is simply unpayable. I view our present situation to that of a family with a NINJA loan with the first NOD in the mailbox. "Honey, we're putting everything on the VISA from now on!" Huge default in the near future & what are the creditors going to do, invade? At this point, if they keep lending us money, it's THEIR fault when we stiff 'em.
Al Adab| 8.26.09 @ 11:08PM
Wesley,
Great source for the name but maybe the wrong guy. How about Wyatt oil instead? More fitting to our thoughts.
I actually have a friend who keeps all the unsolicited credit cards he gets in the mail. Someday he plans to just get the cash advance and head to Argentina. Might be a plan.
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Marc Jeric| 8.27.09 @ 4:54AM
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