It's been a while since my last post. I'm temporarily in Columbus, OH trying to sell our previous home located there. It's taken me a while to get it fixed back up and once again on the market. In the three years we've been trying to find a buyer, it's been one disaster followed by another ... first a major Columbus builder flooded the local market with belly-up mortgage defaults from people they financed who normally wouldn't have been able to finane a stick of bubble gum ... the following year, the city ripped out the street in front of our home leaving a huge gaping hole where a street used to be while they ran all new water, sewer and gas lines up and down the street (even if someone couldn't live without our home they wouldn't have bought it because they couldn't have gotten a moving van anywhere near it) ... and then finally, the entire economy apparently taking a trip to some other planet. Add to all that, realtors who fail to act on reasonable requests to turn on the furnace in preparation for winter, or to turn off the water just in case there might be a lengthy power outage, and you get the general impression of the kind of other disasters that can result. Needless to say ... I'm here until it sells and it's now listed as FSBO, For Sale By Owner. With the loss of 25% of its previous value ... we can no longer afford another 6% (but that's another story for another day).
Since we're directly affected by the downturn in the housing market, I sat down last night to listen to our new President's speech to Congress, the Joint Chiefs, the Supreme Court, the Cabinet ... and of course, the American People. I have to say that he's one hell of an orator. I may be a Democrat ... but I'm also a fiscal conservative ... and in that regard, I definitely was NOT impressed.
If you haven't noticed lately, our national debt is rapidly approaching $11 Trillion! Yes, he talked about cutting the 'deficit' in half by the end of his term ... but for those of you not paying close attention ... the "budget deficit" is not the same thing as the "national debt." Let me explain. A budget deficit is like not having enough money in your monthly budget to pay all the bills that will come due by the end of that month. The national debt is like your home's mortgage. However, the government isn't and hasn't been paying anything each year against principle for quite some time. They've been handling the debt more like folks who took out interest-only mortgages. And if you've been watching the news, those are the folks who found themselves in default when they could no longer keep up with payments, or when portions of that debt came due. At some point, we're going to have to begin paying down the National Debt instead of continually growing it beyond our ability to pay back during our lifetimes.
I listened carefully as President Obama promised to cut the 'deficit' in half by the end of his "first" term. Well ... frankly, that just isn't good enough. At the rate things are going this year, the deficit is rapidly approaching $2-3 Trillion. So ... if in year 2 it's only $1.8T, year 3 it's only $1.3T and year 4 it's $1T" ... that means that the national debt ... you know ... that borrowed money your kids, grandkids and great grandkids are going to have to pay back (because you'll be long gone), is going to approach somewhere between $16-17 Trillion before the end of his first term.
That is totally, and absolutely unacceptable! It's criminal! The U.S. economy is never going to get better if the U.S. Government is continually fighting to borrow the same monies, and crowding out "consumers" and "small businesses" from getting loads from banks who are weary about loaning to anybody these days. Who can blame them? The government itself is getting to the point where they aren't going to have the physical assets nor the political clout to finance of stick of bubble gum. No wonder Secretary Clinton broke from tradition and went to the far eastern countries on her first diplomatic mission (China and Japan are the biggest financers of our national debt, with our social security funds coming in a close third). She had the ominous task of making sure they weren't getting ready to call in a good portion of our national debt.
Low interest rates and out of control spending is what helped get us where we are today. Congress needs understand it's no longer business as usual. Just like American families across this nation have had to learn, Congress needs to learn the difference between "wants" and "absolute needs." "Wants" ... while nice to have, they're out of the question! And ..."absolute needs" need to be scrutinized to make sure they're not the equivalent of 'wolves dressed up as sheep' just so some Congressman can get his pet project through the butgetary process. According to Senator McCain on CNN this morning, a current bill before Congress has over 9,000 earmarks in it. Hello Congress ... you need to change they way you do business! The corrupt use of 'earmarks' (or government-sponsored bribery) needs to end. It's not 'free' money! We, the American public, just can't afford the frivolous Congressional spending.
Mark my words ... taxes ARE going to rise ... they'll have to! Budget Deficits fuel the National Debt which is rising far too rapidly ... and unlike our 401k monies ... that debt isn't going to evaporate on its own, not today, not tomorrow, and definitely, not in the future.
A different opinion:
• Deficits and the Future, Paul Krugman