Why America’s debt must be addressed now

By Tom Quiner

I spent a couple of hours with my financial planner yesterday.

Something struck me: baby boomers like me can really be hurt if America’s indebtedness isn’t addressed quickly. And if Baby Boomers run out of money, our kids could be wiped out because there are so many of us Baby Boomers they’re going to have to take care of (and pay for).

That’s why America’s financial house needs critical addressing.

We hear things like we’ve got a $13.5 TRILLION national debt. But what does that even mean? It means that EVERY U.S. citizen enjoys a $356,000 liability. This doesn’t even count unfunded pension liabilities at the state and local levels that add up to another $574 billion.

What could happen? Last year, the Congressional Budget Office warned that …

“… it’s possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply.”

The former Comptroller General of the U.S., David Walker, warned:

“We are heading for a future where we will have to double federal taxes or cut federal spending by 60%.”

Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, warned:

“The fiscal projections for the U.S. are so stunning that, one way or another, reform will occur. Fiscal policy is on an unstainable course. The U.S. government must make adjustments in its spending and tax programs. It is that simple. If pre-emptive corrective action is not taken regarding the fiscal outlook, then the U.S. is precipitating its own next crisis.”

How did we get into this mess? For the first time in history, according to the Wall Street Journal, half of Americans receive some form of government payments.

How bad is it? Laurence Kotlikoff, writing for www.bloomberg.com, puts it this way:

“Based on the CBO’s data, I calculate a fiscal gap of $202 trillion which is more than 15 times the official debt.”

Have you ever thought of the ramifications if America went bankrupt? It is possible if we don’t halt and reduce our spending binge.  And the consequences would be dire:

1. Your life savings could be dramatically reduced as government inflates the currency in a foolish attempt to pay off debtors with funny money.

2. Your taxes will skyrocket. We can’t do it on the back of the rich. There just aren’t enough of them. As things stand now, only 53% of households in the U.S. even pay any federal income taxes.

3. Your social security and medicare payments would be jeopardized. The money for these programs aren’t stashed away in a vault. They come from your neighbors who pay taxes. If the U.S. is scrambling to pay off debtors, you may be left holding the bag.

4. Your standard of living will drop off a lot. National bankruptcy will plunge us into the worse economic downturn since the Great Depression, if not worse.

I get sick of hearing about doomsday scenarios, so forgive me for presenting such depressing information. But we can fix our fiscal problems if Congress begins acting like adults. In other words, they have to make tough decisions. That’s their job. They’re the ones spending the money. Congress needs to reduce spending now. Don’t tell me “we’re all responsible.” We’re not. Congress controls spending.

Congressman Paul Ryan’s “roadmap” is the only serious plan being presented. It’s not perfect, but it is intelligent, and it is doable.

We’d better do something fast. Time isn’t on our side.


  1. maxine bechtel on May 26, 2011 at 7:23 am

    Thanks, Tom, for reminding us again of what so many financial experts are telling us every day! WHY are so many in WA dragging their feet on doing the responsible thing and cutting spending?

    I just sent a letter to our lawmakers regarding raising the Debt Ceiling and will copy it below:

    “WE THE PEOPLE” are not willing to simply sit silently while you attempt to build your case to raise the Debt Ceiling beyond an already astronomical $14.294 trillion so that you may continue to spend the U.S. into oblivion!

    We have lost patience with the feeble attempts to cut government spending. The recent budget compromise was proven by the CBO to be nothing more than a sham — another game designed to deceive taxpaying Americans.

    We want real fiscal responsibility, and we are holding YOU accountable. Your very job depends on how you address this debt crisis. I urge you to oppose the raising of the debt ceiling, and will be watching how you vote when the time comes. Remember your Oath of Office!”

    I hope they read and heed!

  2. Paul Sharp on May 26, 2011 at 11:15 am

    I concur with your post. We are in a very serious situation yet we see incredible spin like that involved in the NY Congressional District election on Tuesday. Apparently many still do not understand what is going on. We are going broke! Troubling thought to me: is this by design of the Obama administration?

    • quinersdiner on May 26, 2011 at 12:17 pm

      I don’t know that it’s by design. I think it comes down to a simple philosophy: Democrats are the party of government. They are also the party of class envy. Since they perceive government is the solution to everything, spending isn’t a problem. In their view, the problem is that the filthy rich just aren’t paying enough taxes on their “ill-gotten wealth.”