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June, 2012

Excessive Levels of Debt and What to Do About Them

by Larry

As shown at, the accuracy of which I cannot verify but which is at least an intriguing illustration of the mind-boggling scope of the problem, combined debt in our country is unsustainably high and growing by the second. Most, I think, would agree on this. There is legitimate debate about whether, in a recession or slow growth economy with high unemployment, it is best to cut spending dramatically, yet in the medium- to long-term both the spending levels and indebtedness must be reduced.

My father, Leon, a Republican, had a solution back in the 1980s which, if implemented, likely would by now have gone a very long way toward correcting this ongoing challenge, yet without the hazard of greatly deepening an existing recession or of pushing us into a new one. He said, first, that as a nation we should not take on expensive new projects without assuring the means to pay for them. Second, he recommended, and believed the economy could safely sustain, a net 1% lowering per year of the national debt.

Although little was done to decrease debt levels in that decade, the politics of the 1990s did permit and enforce at least an annual budget surplus by the waning years of the Clinton Administration, for which we have a rare cooperation between the major parties to thank.

During the early years of the new millennium, revenue was slashed (taxes went down for most folks), but spending went way up since nothing was done to address huge entitlement mandates, we became embroiled in foreign wars that cost over a trillion dollars with no attempt to cover these outlays, and then, for better or worse, interest rates were kept low, encouraging a real estate bubble plus irresponsible speculative activities by large banks, investment companies, and other mortgage lenders, then it was deemed best (by both Republicans and Democrats) for government to step in to bail out many of the big corporations that were going bust as a result when the bubbles burst, and, to avoid a new great depression, still more funds were used in stimulus spending, though little was actually done to increase the buying power of the average consumer.

As with marriage and divorce counseling or mediation, a no-fault approach seems to work a lot better in politics than tossing accusations back and forth about who is to blame. There is, in fact, plenty of it, blame that is, to go around, and the debts we have taken on are not limited to the federal government but include tens of thousands of dollars of personal arrears per average adult in this country.

If a better handle is not managed on our total national money owed, sooner or later we shall be facing the kind of crisis Greece is undergoing due to its own profligacy. Already the U.S. credit rating has been lowered, and it may be again soon.

All that is in the past. What NOW can be done about it? Neither a "no new revenue" nor a "don't touch our entitlements" policy will work. For a realistic plan to deal with our debt to fly, both the "wing" of additional revenue and that of decreased spending must be employed.

I do not fault the Paul Ryan plan. I have quibbles with it, yes, but I respect that he has put out there a bold attempt to curb our huge debt difficulties, albeit without substantial effect for years to come. In some ways it may go too far, in others not far enough. It is at least a serious attempt to get a national discussion going on how to tackle the debt problem before it becomes overwhelming.

I personally favor the bipartisan Erskine Bowles-Alan Simpson plan, a product of much research and a couple years of realistic addressing of the key issues by both Democrats and Republicans. I like what conservative writer Brandon Hartness has to say in "Two Voices of Reason Amidst a Sea of Gridlock" about Erskine-Bowles: Carolina Review - UNC's Conservative Journal\; March 14, 2012.

It is a shame (understatement) that President Obama, who established the commission which generated their plan, has as yet still not enthusiastically supported Bowles-Simpson.

I like my dad's remedy too, but what is urgently required more than any one approach is a new drive for both sides of the Washington aisle to once again work together to accomplish great and essential things for America.

Whether Obama, Romney, Clinton, Rice, or... and whether in the White House for one-term or two, until this country's highest office holder squarely and publicly faces up to the truth about our debt levels and about reasonable, statesmanlike measures for dealing with them, he or she will leave a legacy of weak leadership and further weaken our fine land to boot.

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