Your Second Mortgage

Whether you wanted one or not, did you know you have a second mortgage?  In fact, so do your kids.

As of this writing, Sunday morning, May 31st, you, the reader of this column, owe $36,966.48.  Did you know that?  Did you agree to that?  Have you made arrangements to pay for that?  That is your portion of the current national debt of $11,322.194,597,521.93.  In case that large a number is unfamiliar to you, that is over $11.3 TRILLION dollars.  That’s right trillion.  In fact every American, every man, every woman, every child, no matter the age, owes that amount.  If you are the typical family of four your family owes $147,865.92.  That is more than most people’s mortgage.  If you are living in an apartment aren’t you happy to know you owe a mortgage sized amount you never applied for?  And this is the good news.

The bad news is that amount is still growing.  Every minute of every day it is going up.  In fact, the Obama administration budget will double it in the next ten years.  There will no longer be a need to slap a newborn baby on the bottom to make him cry, he will owe over $70,000.00 the moment he is born, that should be enough to make him cry.

President Obama would like to blame the Bush administration for this problem, but that just doesn’t hold water.  Most of the overall national debt, the sum we owe because of past budget deficits, was run up before the President took office.  It would be both inaccurate and unfair to hold him responsible for that.  In fact, since 1960, the government has only run budget surpluses in the final years of the Clinton administration.  The Bush deficit for 2008 was in the range of $400 billion.  Bad, but not like now.  Then came the financial meltdown.

The drop in tax revenues as the economy slowed, the increase in payments to individuals through our safety net programs, and the $700 Billion TARP bailout to the banks caused the Fiscal Year 2009 (FY 2009) deficit numbers to soar to around $1.2 trillion.  Enter President Obama.  He inherited that amount of deficit, he could have chosen to restrict spending.  Half of the TARP money was spent by Bush, $350 billion, President Obama could have cancelled the other half and cut the projected deficit under $1.0 trillion.  He didn’t.

President Obama spent the other half of the TARP money.  That is on him.  President Obama asked for and received a stimulus bill of $787 billion dollars.  Congress passed it without reading it.  Not one member of Congress in either house read the bill or had any good idea what was in it before the passed it.  President Obama signed it.  That is on him.  President Obama signed an Omnibus spending bill that was $410 billion and contained over 8,500 earmarks.  That is on him.  And the President sent to Congress a $3.55 trillion dollar budget.  That is on him.  Now the White House estimates the FY 2009 deficit at $1.7 TRILLION dollars.  That is on him.

The Congressional Budget Office estimates the budget deficits over the next decade will be $2.3 TRILLION higher than the Obama administration’s estimate.  The CBO as a non-partisan organization has a better record of predicting these things than any White House projections, Republican or Democrat.  Even the President has come to realize we are simply out of money.  He said in a recent town hall meeting in Rio Rancho, NM:

But the long-term deficit and debt that we have accumulated is unsustainable.  We can’t keep on just borrowing from China, or borrowing from other countries because part of it is, we have to pay for — we have to pay interest on that debt. And that means that we’re mortgaging our children’s future with more and more debt, but what’s also true is that at some point they’re just going to get tired of buying our debt.

I have news for him, China and other countries are already getting tired of buying our debt.  In fact, now the Federal Reserve is buying our own debt because we can’t keep borrowing that much money.  What does it mean that the Federal Reserve is buying our debt?  When the Federal Reserve buys government bonds they take the bonds and simply transfer an amount of cash into the account of the entity they bought the bond from whether it is a bank holding the bond or the U. S. Treasury issuing the bond.  This then increases the “money supply.”  This means they simply “print” the money.  That’s right, in the age of electronic banking, the bank of last resort simply creates the money out of thin air.  If this continues it will lead to double digit inflation or worse.  Countries that have done it in the past for any length of time saw runaway inflation as a result

So what is President Obama going to do?  Is he going to urge the repeal of the unspent portion, which is over 95% of the total, of the stimulus bill?  No.  Is he going to look for ways to cut spending?  Well, they came up with a few billion, mostly on defense when we are fighting two wars and facing threats from Iran and North Korea.  Is he suggesting the repeal of any of the excessive spending in the Omnibus Spending Bill?  No, not even the earmarks.  Instead he is proposing a new initiative on National Health Care Reform (read nationalized health care) that he claims will cost an additional $750 BILLION but some analysts think will cost as much as $1.5 TRILLION each year.  In other words, his approach is, ‘we have no money, let’s spend more money.’  This is akin to you trying to pay off your credit card debt by charging more.  Is it just me or is this crazy?

Now for the really bad news.  So far all these numbers just involve government spending on an annual basis.  The deficits on the yearly budget and the accumulated debt, the national debt, because of it.  We haven’t looked at the liabilities we, as a nation have taken on.  The government has liabilites, promises to pay certain amounts of money that are off the current yearly budget but will show up down the road.  I am talking here about Social Security payments in the out years, Medicare and Medicaid payments that will be necessary in years to come, and retirement payments promised for civil servant’s and veteran’s pensions.

If you add in all these items, that currently are unfunded, the government (that is to say you and me) owes $63.8 TRILLION.  That breaks down to $546,668.oo per household in the United States.  Are you feeling broke yet?  This situation is simply unacceptable and unsustainable.  If we as Americans do not get this under control now, America will become a footnote in history.  A great nation that simply spent itself into oblivion.

This government must be returned to the original intent of the Founding Fathers.  All the stimulus and bailout spending must be stopped; it isn’t working anyway.  We have spent billions of dollars to keep GM and Chrysler out of bankruptcy.  How is that working out?  We passed a $787 billion stimulus bill.  Only 5% of it has been spent so it isn’t stimulating anything except higher deficits.  It should be repealed.  We shouldn’t even be talking about a nationalized health care system.  We should be repealing the prescription drug program President Bush passed.  Government should get completely out education, that is a local function.  The Department of Education should be closed permanently; they haven’t educated a single child.  The Department of Energy should be shut down; it hasn’t produced a kilowatt of energy.  The Department of Homeland Security should be abolished; we already had a department in charge of our security, it is call the Department of Defense.  In other words, this massive federal government structure that we have been building since Teddy Roosevelt needs to be dismantled piece by piece, stone by stone, until the federal government is returned to the limited role in our lives that the Founding Fathers intended.  Along with the spending reductions must come tax reductions so all Americans are free to enjoy the fruits of their own labors.

Social Security, Medicare and Medicaid should have never been started.  They have grown unchecked for decades and now they must go away.  That is right, the third rail of American politics, Social Security, must be dismantled completely.  Hey, I am not running for anything, just telling the truth.  It may take 50 years to do it in a way that will not destroy the lives of people who are dependent on it, but it must be done.  We must begin now to return the responsibility of taking care of us, to us.  There are no other options.  If this doesn’t happen we are looking at the greatest upheaval, both economic and political, in our history.  The politicians of both parties have seen to that.

By the way, in the time it has taken me to write this column, your second mortgage to pay the national debt has increased to $36,967.33.

EDITOR’S NOTE:  If you want to keep track of the National Debt and your portion of it go to THE NATIONAL DEBT CLOCK.