On The Debt Crisis

As the negotiations over the U.S. government budget drag on, I alternate between anger and indifference, anger because I understand the motives that got us into this crises, and indifference because I know how it will end.

Our government is in a budget crisis because it has repeatedly violated the most fundamental of financial principles: Don’t spend money you don’t have.

The choices now are so unpalatable neither political party can agree on who should take the medicine.

Americans, however, are in no position to blame their politicians for this mess.  In a democracy, people generally get the government they deserve.  Our government is in debt because the people it governs don’t believe there is anything wrong with debt. It’s no coincidence Americans are more indebted than ever at a time when the government is posting record debt and budget deficits.

You can tell much about our attitude toward debt by the words we use to describe it.  When a company borrows money they don’t call it debt but “leveraging.”  When individuals borrow money to by a car or house it’s not debt but “financing.”  It’s like how we call adultery an “affair” or fornication “hooking up.”

My point is not to get all moralistic, but to simply make an observation. Our government is in debt because our people are okay with debt.

Now maybe you are thinking, “Sure, I have debt, but I don’t have more than I can repay.”

But what if you lost your job today, could you still pay your debt? Because that’s what happened to the government. The recession was the equivalent of the government losing its job, its expected stream of income, and when that happened it could no longer make its car payment or pay its mortgage.

The Apostle Paul said to “Owe nothing to anyone except to love them.” (Romans 13:8). We’d all be better off if we took Paul’s command at face value and recognize that debt is a moral issue, not merely a financial one.

Until that happens, if you want to feel better don’t think of your government as being in a debt crises but merely “over leveraged.” GS