For government, consumers: Borrowing's OK if done in moderation
by Barbara Anderson

The Salem News
Thursday, May 3, 2012

Tax Month is over, now we can go back to talking about debt.

Last week I got an email from the Northborough Tea Party with a 20-minute video from self-help guru Tony Robbins. I didn't know who he was, which probably explains a lot about my self.

I thought, they want me to spend 20 minutes watching a video? But then I remembered I'd just spent three hours catching up with "The Good Wife" on Comcast-on-Demand, because in real time I watch AMC's "The Killing" every Sunday night instead. It's not as if my weekends are always spent doing something useful.

So I watched the video. It was riveting. The title of Robbins' presentation, which is on a Ron Paul website, is "The National Debt & Federal Budget Deconstructed."

Beginning with the $15.4-trillion national debt (or $117 trillion counting unfunded liabilities), he explains what "a trillion" is in seconds. A million seconds is 12 days. A billion seconds is 32 years. A trillion seconds is 32,000 years ago, when we were just evolving as human beings.



One Million Dollars in $100 bills

2012 U.S. Debt Ceiling

U.S. Unfunded Liabilities

The 2012 federal budget is $3.79 trillion. That's $10.4 billion a day, of which we borrow 40 cents on the dollar.

States have debt, too, though they are required to balance their annual budgets. However, according to a 2011 Associated Press survey, "The 50 state governments owe more than $1 trillion in unfunded pension contributions and health care obligations to retired public employees." Yikes; in seconds, that's 32,000 years!

An April 27 Wall Street Journal piece by Steven Malanga notes the debt of Illinois is $3,399 per person in accumulated obligations. Last year, Illinois "imposed $7 billion in new taxes on residents and business, pledging to use the money to eliminate its deficit and pay down a backlog of unpaid bills. But more than a year later, the state is in worse fiscal shape, with its total deficit expected to increase to $5 billion from $4.6 bil

lion." Guess that tax-hike solution didn't work in President Obama's home state. Now what?

Last year, my home state's Harrisburg became the first state capital to file for bankruptcy. Then the Pennsylvania General Assembly amended the state's fiscal code to block third-class distressed cities from filing for bankruptcy protection for a year. Last week Harrisburg challenged the courts' upholding of that blocking. If it loses, what then?

Despite all this, I've begun questioning my own attitude toward debt (i.e., horror of). My parents taught me to borrow only for necessities I couldn't save for, like a home, and even then borrow only what I could reasonably expect to pay back.

I've spent my entire life avoiding debt, starting with dropping out of college when I ran out of money. Last week college students demonstrated in several cities to mark the day that total U.S. student loan debt reached $1 trillion. Yikes! In seconds, that's 32,000 years!

But recently I was at a meeting during which people were discussing their student debts and I asked, probably unkindly: What were you thinking?! They patiently explained: It's just accepted that if one wants to pursue a career with a college requirement, one has to borrow in anticipation of making a good living.

I've been thinking about this ever since. Never mind that because of the economy, the expectation of making a good living is no longer necessarily viable. In the past, people who, unlike me, did borrow and graduate, went on to make a lot more money than I did. Maybe, then, they are debt-free today just as I am. Maybe.

But I have a feeling that borrowing can easily become a habit.

I admit I didn't really care about getting a college degree anyhow; didn't know at the time I ran out of money what I wanted to be when I grew up.

What if I'd really wanted to be a lawyer, librarian, whatever, requiring a degree? Would I have borrowed? How much?

I've recently read about senior citizens like me who still owe for student loans. Yikes!

My dream was to travel, and because of being a Navy wife and then later, with travel a priority for my savings, I did visit the places I most wanted to see. But what if I'd reached age 60 and still not seen Paris, Greece, Ireland, or the Alps? Would I have borrowed then, for a non-essential European vacation, in last-chance desperation? Is there any non-essential I would have gone into debt for?

The answer is no. But that leads to a bigger question: What would our economy be like, where would some of our most productive citizens be, if everyone was like me?

For one thing, capitalism would barely exist, except to fund investment in major, essential enterprises.

Government would borrow only for infrastructure and war. Life on earth would be a few centuries closer to the way it was 32,000 years ago, when human beings first evolved into basket-weavers, and no one was in debt.

So debt drives civilization, and all people fortunately aren't like me. There's a happy medium out there somewhere, a few billion seconds behind where we are today.

NOTE:  The above images are borrowed from "US Debt Visualized in $100 Bills" and "A visualization of United States debt" for this presentation of Barbara's column. If you're not overwhelmed enough yet, visit those sites for more visualizations and further astonishment.

The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and other Eagle Tribune newspapers; bi-weekly in the Tinytown Gazette.

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Citizens for Limited Taxation    PO Box 1147    Marblehead, MA 01945    508-915-3665