By Floyd and Mary Beth Brown
September 14, 2009
It takes 12 zeroes to the left of the decimal point to make a trillion. Or in other words, a trillion is a million million dollars.
Time magazine tried to put it in perspective this way: "When trying to comprehend a trillion-dollar deficit, you might calculate how much money that represents per person in the U.S. One trillion dollars divided by 300 million Americans comes out to $3,333. Then you search for a useful comparison. A convenient -- though perhaps unsettling -- comparison is to the amount of credit-card debt carried by the average person in this country. That figure is $3,245."
By Eric Allie, Caglecartoons.com
Distributed to subscribers for publication by Cagle Cartoons, Inc.
We find it hard to wrap our minds around such a large number. President Barack Obama doesn't share this affliction. He is pushing the U.S. Senate to raise the U.S. debt ceiling beyond $12.1 trillion. This year's deficit alone is set to surpass $1.8 trillion.
Just four months ago on May 14, 2009, Obama warned, "We can't keep on just borrowing from China, we have to pay interest on that debt, and that means we are mortgaging our children's future with more and more debt." He went so far as to say the budget deficit is "unsustainable," that day in Rio Rancho, New Mexico.
Last year at this time he was criticizing President Bush's deficits. And Bush was wrong to expand the federal budget by a then-historic $700 billion, but his deficits are small potatoes now. According to the Obama administrations own numbers, from 2010 to 2019, annual deficits will total $7.1 trillion; that's on top of the $1.8 trillion in 2009.
The debt ratios look terrible. The ratio of federal debt to gross domestic product (GDP, or the entire output of America's goods and services) would reach 70 percent, up from 41 percent in 2008. These are the worst figures in over 60 years. Sixty years ago we were dealing with the debt accumulated fighting Hitler and Japan in World War II.
So if Barack Obama really means what he said on May 14 about the deficit, why does he keep proposing new spending? The answer is politics has trumped his own good sense.
The greatest difference between Obama and conservatives is on the question of ownership of our economy's resources and money. Conservatives believe that to stimulate the economy, you lower taxes and allow businesses and individuals to make decisions about how any money should be used. Obama believes the elites who control government should make the decisions about how the money should be used.
Therefore, rather than stimulate the economy with across the board tax cuts as Reagan did in the early 1980s or George W. Bush did after the post-September 11, 2001 recession, Obama has chosen increased government spending as his favorite tool to revive the economy. Problem is, it doesn't work.
Nobel laureate and economist James Buchanan told the London Telegraph this week, "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."
Buchanan's prescription is to do the exact opposite of Obama. He would restrain spending while the economy heals.
Ironically, Obama just can't change his habits, so he is also proposing universal healthcare which will cost no less that $900 billion and likely much more. He also wants new regulations to protect us from global warming called the "cap and trade" bill, which will cost tax revenue by decreasing the GDP.
Professor Terry Easton summarized the problem in Human Events, "So, by 2020, some economists estimate that the federal debt will reach over $30 trillion. At 4% per year interest, that's $1.2 trillion annually. Or, 41% of the 2008 federal budget. Gosh, these numbers are breathtaking. Just to pay the interest -- not the principal even -- on the national debt would mean that the government would have to eliminate the entire budgets for the US military and Social Security. No more guns or butter."