With The Bureau of Public Debt pegging the national debt at around $11.9 trillion, instead of trick-or-treating for UNICEF this year, children everywhere should go door to door and collect money for the United States government. In 2008 alone, according to the bureau, the U.S. government shelled out $451 billion in interest to finance that astronomical figure. Generally accepted accounting principles allow the government to exclude future liabilities, such as Social Security and Medicare benefits, that it is legally obligated to pay. According to the libertarian-leaning Peter G. Peterson Foundation, when those costs are calculated, the U.S. debt reaches a startling total of around $58 trillion, and it is growing $2 trillion to $3 trillion annually. Since President Barack Obama took office in January, the national debt has increased $1.3 trillion, according to bureau figures. The Obama administration’s most expensive projects to date include the auto and bank bailouts and the $787 billion American Recovery and Reinvestment Act. The George W. Bush administration also saddled the American taxpayer with an equally large millstone, thanks to the Afghanistan and Iraq wars. The National Priorities Project, a federal budget watchdog group, predicts that the total costs of those wars will exceed $1 trillion by October 2010. The federal government’s fiscal policy mirrors that of a college student on a credit card spending spree – when the card is maxed out, the government finds a new one. Our nation’s two largest financiers, the Chinese and Japanese governments, have enabled that type of behavior. August 2009 Department of the Treasury figures show that the Chinese government owns $797.1 billion in U.S. Treasurys or about 6.6 percent of the total national debt. Japan holds $731 billion worth and about 5.6 percent. In fact, according to the Peterson Foundation, 49 percent of the national debt is foreign-owned, either by governments or citizens. The foreign revenue stream cannot last forever, and that flow has started to ebb. Fearing that the U.S. was over-leveraged, China decreased its share of U.S. debt by 3 percent from May to June this year. The Chinese reduction in Treasurys occurred after chastisement from Beijing on U.S. deficit spending. In March, Chinese Premier Wen Jiabao called the safety of U.S. debt into question. "Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried," Jiabo said. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets." The Chinese government’s proportion of the U.S debt has increased since June, but Jiabo’s warning is still alarming. Concerns about deficit spending and the U.S. debt have led American policymakers and scholars to search for new sources of revenue – usually from taxes. These taxes range from a federal sales tax for items sold online to "fat taxes" designed to help public insurers recoup costs from overweight people, as proposed by West Virginia Public Employees Insurance Agency this week. The tax that has caused the most national policy debate recently, however, is the call for a 1 cent per ounce excise tax on sugary beverages, such as sodas or sports drinks. A 12-fluid-ounce can of Coke, for example, would mean 12 cents of tax revenue for the federal government. And those pennies accumulate quickly. According to the Yale University Rudd Center for Food Policy and Obesity, such a tax would raise approximately $15 billion per year for the U.S., roughly enough to cover the interest on the national debt for two weeks. The tax hardly seems worth implementing when put in those terms; it would be little more than a nostrum if enacted on its own. Yet, the soft drink tax stands for more than simple revenue creation. The tax signifies novel thinking about how to address the federal government’s financial problems. If the soft drink tax is levied in tandem with a rigorous initiative to cut pork spending and implement cost-saving measures at federal agencies, the national debt could gradually be reduced over time. This assumes, of course, no major new spending, such as wars or a government health care plan. The other impediment is political reality. No politician wants to raise taxes. The time has come to do what is fiscally prudent, not politically convenient. Should no new taxes or budget cuts be initiated, the American voters should ask their representatives in Congress to vote themselves a year-long furlough. At least there would be a reduction in Congressional salaries within the federal budget.
The scariest creature this Halloween is the colosssal national debt
Published: Thursday, October 29, 2009
Updated: Friday, October 30, 2009 01:10
6 comments
I agree with the article, the scariest thing this Halloween is our government debt.