So I’m doing some serious Greenbean type thinking the last few days about the deficit, debt, and stock market plunge of the last few days. Some thoughts come to mind. They are only slightly related.
Number 1: I remember three weeks or so ago when we were still on vacation my oldest daughter and I were driving around and I was listening to NPR on the radio and there was a piece on the deficit talks and how it was hard to get a deal made. (Note, of course we all know how hard that was). My daughter, who is 16, asked me what that actually meant. So, I told her about government spending, revenues, and how for the past 40 years we have progressively spent more and more on social services and entitlements but also systematically taken in less and less on taxes. The result has been that we are borrowing vast amounts of money, and much of it from other countries, like China, and that in order to keep going the congress was going to have to agree to raise the limit on what they could borrow so they could borrow more. It made me depressed and my daughter wondered, “Who is running this country?”
Number 2: The idea of raising your own debt limit is really odd, isn’t it? When I need to borrow money or if I wanted to raise my credit card limit, I have to ask someone else’s permission. Not congress. They just print more money. Perhaps the problem lies in who gets to approve this. Maybe congress should put deficit spending to a public vote—but only those who pay taxes get to vote.
Number 3: Debt—that is the word used in the King James Version of the Bible for the Lord’s Prayer as a synonym for sin: “Forgive us our debts as we forgive our debtors.” I’ve always thought the connection between a debt owed and a sin committed was telling. Perhaps our debt problem as a nation is a collective sin which we have not confessed. If that is so I suggest the sin we are guilty of is not materialism, (because a lot of the debt spending is actually for wonderful altruistic things like helping the poor and vulnerable) but instead it is the sin of electing spineless politicians who find it easier to kick the can down the street instead of dealing with the issue.
Number 4: The ideologues are going to get us all in a lot of trouble. There are two sets of ideologues which are driving this crazy train. One ideology says never raise taxes and just cut spending while the other ideology says never cut spending and just raise taxes. Now here’s the scoop: taxes are going to have to be raised one way or another and spending is being cut all across the nation. Smart leaders would acknowledge this, come square with the people and get things taken care of. The American economy is strong and can survive both cuts and raises in revenue. It might not be in the future if something is not done now.
Number 5: I refuse to look at my annuity right now. It is a bad idea to even think about looking at what your portfolio is worth right now. It is in times like this that smart investors buy. That is what I learned in economics classes in college. Buy when the market is down. That means temporarily you are losing money, but in the end, when things rebound, and they will rebound, you’ll be better off. The ones who are getting hurt are those who are retired or near retirement. That is why it is so silly that congress and the President (yes, he must take some of the blame) let this happen.
Number 6: Back to my daughter and I listening to the radio news. She asked me, “If we don’t raise the limit and pay our bills, can the other countries repossess the United States?” I replied by saying, “No way. Part of what we’ve been spending the borrowed money on is really big guns that fly fast. I dare anyone to try to come and take it.”