Unsustainable Debt

The stock markets in the U.S. and other countries have been taking a beating in the last two weeks, and it seems to have been caused (this time) by problems emanating out of Europe. Greece is heavily in debt; a debt that appears to be unsustainable. How bad is it? The Greek government has declared that they have no problem with the idea of issuing a statement of national bankruptcy, which means that any country holding one of their bonds or any other form of their debt in good faith will be ‘up the creek without a paddle.’ Meanwhile Portugal and Spain are making the same noises in regard to their own unsustainable debt. And we think our own country is in a mess?

We are and it is.

The Federal Reserve has stated that by the year 2020, a scant ten years from now (and boy will those years fly by) we as a country will have achieved unsustainable debt levels. Our ‘money going out’ will exceed ‘our money coming in’, to put it in McNeill-speak. Why will we reach that point? Entitlement programs in ten years will reach 80% of our gross domestic product, or GDP. Our GDP is the amount of money we take in through taxes, tariffs, and selling our own treasury bonds. Couple this fact with our ever burgeoning national debt, and you have a recipe for a catastrophic economic disaster.

The only solution is for our country to make more money, you know, raise taxes to increase the national income. Charge everyone an extra ten per cent and all will be good, right? But that is where everything begins to get into the gray areas. By the latest government estimates, over forty per cent of the population, whether working or not, do not pay any taxes at all. Actually it is closer to fifty per cent and that number is rising each year. So instead we will have to double those taxes on the people that do pay them. How much longer will this special class, the group of workers that pay all of the taxes in the first place, accept this situation and go along with it?

Stop, you say. How can almost half of our population not pay any taxes? We all have income taxes and sales taxes and we all pay them, huh? Yes. But at lower income levels they get their money back when they file each year, and a lot of people are now getting back more tax money than they actually paid via a special entitlement called EIC. But don’t take my word for it, visit the government web sites and use Google searches to look this up for yourself. While you are there, look at crime statistics… wait a minute, I am digressing here.

A lot of folks out there will want to lay this square at the feet of our current President and Congress, but there is plenty of blame to go around. This problem did not simply occur overnight, yesterday, or even within the last year. This has been going on for longer than I can remember and I’ll be fifty years of age in a few years. It all started back when Keynesian economics crawled to the forefront and was accepted by those in charge of the herd back in the late 1940s and early 1950s. John Maynard Keyes was an economist that was considered brilliant and ahead of his time. He taught a theory that advocated government intervention, or demand-side management of the economy, to achieve full employment and stable prices. And we bought into it hook, line, and sinker as a country and as a society in general. We have supplemented his theory and added steroids to it during the past five years. As a result we now find ourselves on the precipice of the abyss at this point in the history of our nation and apparently the world’s economic history as a whole.

Stimulus packages? Let’s pass another one! Do tell.

There’s more here than meets the eye, of course. We started our descent into the world of Keynesian philosophy around the same time that we began removing God from anything of importance in our society. We became enlightened in our own minds, with government as the all-powerful, all-seeing provider for our every need. Government could be counted on to watch over us, feed us, and even raise our children for us. It takes a village. Now that we see our bleak future seemingly laid out before us by that very same government’s own statistical evidence, we need to recall the words of the Psalmist in chapter 9: “The wicked shall be turned into hell, and all the nations that forget God.”

Unless we make a one-hundred-and-eighty-degree ‘about face’ as a nation, and remember in our hearts the God who once made us great, we had better hang on tight. It’s going to be a bumpy ride. Our current debt to God is already unsustainable.