U.S financial crisis worsens

Americans are disgruntled with the government’s deficit spending.

Last week, we spoke of issues and concerns outside our world here at Biola that have the tendency to break into the seemingly not-so-impenetrable Biola bubble. One such issue that perhaps even the most casual observer of the American political scene has noticed is the financial crisis surrounding the growing disparity between the revenues and expenditures of not only the federal government, but also a large number of state governments including here in California. That’s a somewhat-fancy way of saying that we are either broke or headed in that direction very soon.

National debt rapidly increases

Take the federal government, for example. As of this moment –– and this number increases significantly by the time I finish writing this sentence –– the U.S. national debt is somewhere short of $14.3 trillion. To give you some perspective on how fast this number has been growing within the last decade, in 2000 when George W. Bush assumed the presidency the national debt was just short of $6 trillion. During the eight years of his tenure, the national debt rose by almost $4.9 trillion. During just the first 18 months of the Obama presidency, the debt continued its meteoric rise by another $3 trillion. For fiscal year 2012, the budget offered by the president projects adding another $1.65 trillion to the debt. This means that our federal government, if the Obama budget is approved by Congress, will spend $1.65 trillion more than it takes in in just one year. This is called deficit spending. Again, to bring some perspective to how fast the federal government is growing, $1.65 trillion represents the size of the entire federal budget just 14 short years ago!

Fiscal situation significantly affects everyone

But what exactly is the national debt? Let’s see if we can bring some clarity to this by analogizing to your family’s personal budget. Let’s say last year your family earned $75,000 in income and spent $100,000. That would mean that for 2010 your family’s deficit spending was $25,000. How would your family make up for this shortfall? Answer: by borrowing money. This act of borrowing money adds to your family’s debt. So, when our federal government spends more than it takes in during its fiscal year, it borrows the money and thus adds to our national debt. So, what’s your stake in all of this? With the current national debt fast approaching $14.3 trillion, this means that each citizen’s share of the debt is almost $46,000 per person. If we just look at taxpayers, then the figure rises to over $128,000 per person.

The bottom line to all this number crunching is that there is an almost universal recognition that this kind of fiscal situation is not sustainable. The mounting interest tsunami alone on such a massive national debt will represent such a significant portion of future federal budgets that many believe the country will be forced into bankruptcy. To say that this would impact all of us is quite an understatement. In fact, it seems likely that this issue will have a significant impact on future generations of Americans, causing them to live at a lower standard of living than we enjoy currently.

Americans send politicians a message

If you are interested in what is being done about this currently, you might want to check out the political theater currently taking place in Washington, D.C. The last big election in November 2010 was largely a referendum on the direction Obama and the Democratic-controlled Congress were setting. In short, the people were not happy and issued the president and his party a historic defeat in the midterm elections. The peoples’ frustrated message: Get our fiscal house in order! A whole new political movement, The Tea Party, has emerged in American politics as a result of this frustration. Since the midterm there has been a lot of partisan wrangling in Congress over how to get on a path to fiscal sanity. Over the past month or so, Congress has passed a few temporary spending bills called Continuing Resolutions just to keep the government operating during this current fiscal year ending September 30, 2011. Republicans in Congress largely are arguing for greater cuts in federal spending than the Democrats seem comfortable with.

Political parties disagree on federal spending

The real battle will begin later this spring when debate begins on the fiscal year 2012 budget. The president has initiated the process by offering a budget of $3.73 trillion, which many lawmakers on both sides of the political spectrum believe essentially ignores the growing fiscal crisis. Republicans in the House of Representatives –– spurred on by their new Tea Party members elected in November 2010 –– want to cut $61 billion from the current budget year as well as roll back federal spending to 2008 levels. For fiscal year 2012, some GOP lawmakers desire to see another $100 billion cut from federal spending. Some Democrats argue that such “draconian” cuts in spending would have the result of harming the already-sputtering U.S. economy forestalling any hopes of a financial recovery. At the very least though, there seems to be some measure of a universal recognition of the need to reign in federal spending. How much and how fast remains to be seen.

So, this is one to watch, my fellow Biolans. Wherever your political loyalties lie, we should all be urging our elected representatives both at the state and federal level to bring our fiscal house back into a sense of order. If not, the coming financial tsunami that seems so inevitable will almost assuredly devastate us in ways that are not particularly pleasant to ponder.

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