A Child Can Understand the Meaning of DebtSubmitted by legalizeliberty on Mon, 08/24/2009 - 10:12
By Peter Orvetti
My sons, who will be five next month, have recently discovered mathematics. They are learning their numbers, and are intrigued by the concepts of addition and subtraction. They do, however, have a tendency to guess that 10 plus 12 is "forty hundred", or to insist that there is a number called "seventeen eleven". (This has led me to question my competence as a homeschool dad.)
Even they, though, have a basic understanding of how money works. When we are at the bookstore or the toy store, they know that they cannot buy a six-dollar item if they have just four dollars. They also know that if they save their money wisely, they can afford even better things later on.
It would be nice if the government could learn this lesson, too.
It is overly simplistic to say that spending should never exceed income or saved wealth. We buy houses and pay for college through big loans, since the costs often exceed regular income. We also purchase cars and furniture and other products on pay-over-time, interest-based systems. Similarly, governments must have the capacity to allocate funding for emergencies and major long-term projects.
However, these circumstances should be the exception, not the rule. But sadly, governments overspend as a matter of course. Late Friday afternoon, officials at the White House Office of Management and Budget confirmed that they expect the 10-year budget deficit to reach $9 trillion, not the $7.1 trillion predicted just three months ago. In June, the nonpartisan Congressional Budget Office projected a $9.14 trillion deficit between 2010 and 2019, and that number could now tip into 14-digit range, passing $10 trillion. Deficits could easily exceed four percent of the gross domestic product.
Bear in mind that this is just the deficit projection, not the national debt. That number has passed $11.7 trillion, and is growing at $45,000 per second. That's more than $5,000 more than the annual U.S. income per capita -- every second.
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