The average American has a lot of debt these days, including a mortgage, a car loan, a few credit cards, perhaps some hospital bills; who knows? Debt has been a part of life for decades.
Imagine you’re working and making $50,000 a year, and you’re suddenly hit with a debt of about $50,000. Too many of those who lived under the old health insurance system know exactly what I mean. You have two choices; you can eitherfile for bankruptcy or you can pay the debt. Because of the stigma bankruptcy carries to this day, most people will opt to pay the debt, but how would you do it, assuming you’re rational?
Of course, in the short term, you’ll cut back on food a little, and maybe lower the thermostat, buy fewer clothes; maybe cut off the cable and watch a lot of Netflix, but at that rate, you can imagine how long it would take you to pay off $50,000. Even if you could manage to save $500 a month, which would be extremely difficult for most people, with an interest rate of five percent, it would probably take 15-20 years to pay that off. More realistically, you’d probably save $200 a month, and the debt would hang on for far longer. So, what do you do?
Rational people would get a second job, or another member of the family will go to work, am I right? If you have that much debt and you have to pay it off, there is only one solution; more income. It’s just not possible to pay down a debt that size without either forcing your family to live in a box beside the freeway for a few years and devoting all of your income to paying it down or by increasing your income. And extra $1000 a month, and the debt would be livable, right?
And yet, look at the Republican approach to deficits and the national debt. They have run up a huge debt, left it to our children, and they’re pretending to pay it off by forcing the government to live in a box beside the freeway. And they refuse to allow us to “get a second job.”
When it comes to deficits and debt, Republicans are irrational. All they can think to do to reduce the deficit is to reduce spending. Of course, they only reduce spending when they think they can blame it on Democrats. But here’s the catch; government spending is not the problem. Despite Republican rhetoric to the contrary, the only time deficits are caused by government spending is when there’s a recession. The only exception to that came with World War II. Over the last 35 years, our deficits were largely caused by combination of unwise tax cuts and a lack of investment and job creation. Before Republicans cut taxes on rich people who neither needed or wanted them and proceeded to start two unfunded wars, the budget was projected to be in surplus for at least a decade, thanks to the discipline imposed by the previous President Clinton.
I could cite you the numbers, but I’ve already done that here, so I won’t bore you with the usual tripe. The primary reason the deficit is so high is because there just isn’t enough income. And it’s not because of the recession; thanks to the heroic actions of Obama and Congressional Democrats, that ended a while ago. The real reason the deficit persists is because Republicans insist on cutting the budget, and rejecting every attempt by Democrats to create jobs. It’s so bad that Obama had to raise taxes on the very rich a few years ago, which would actually have been unnecessary if Congressional Republicans hadn’t blocked every job creation bill proposed since Obama became president.
Republicans pretend they’re concerned about the deficit, but it’s impossible for them to care less about it, in reality. Of course, Dick Cheney actually said that at one time, but it’s also incredibly obvious in their actions. Spending cuts alone won’t eliminate the deficit, even now that Obama has cut it by two-thirds. In fact, the deficit for last year was $483 billion and the interest on the current national debt was $431 billion, which means, without the massive debt the GOP added in the neocon era, we’d be really close to balanced. But even that reduction wasn’t accomplished by spending cuts; it happened because, despite the best efforts of Republicans to block the effort, unemployment dropped from 10.1 percent to 5.3 percent.
It’s simply impossible to cut the deficit by simply cutting. It’s also necessary to create jobs, which means taxpayers. Republicans don’t seem to understand this concept, but there is a way to create more revenue for the government without raising taxes. If you create enough taxpayers, you don’t have to raise tax rates on anyone. Of course, the Republican ideology won’t allow that, because they tell their gullible minions, “government doesn’t create jobs,” and they believe it because, well, they’re gullible minions. They believe this despite the fact that government building infrastructure and handing out contracts was how we built the greatest economy in the world. All those roads and schools and sewer systems and libraries and police stations and community centers and all of that didn’t build themselves, regardless of what Fox News says. Likewise, the boom in degreed professionals happened because government money helped them go to school and learn their profession or trade. Government guarantees on mortgages and bank deposits made it possible for banks to lend the money needed to cause a housing boom, and deposit insurance made car loans and credit cards possible, which is why Americans lived so well for so long, until Republicans tanked the economy.
The root of our debt problems comes from the Republican right wing mindset, which seems to believe that every dollar government spends just vaporizes, which is, of course, ridiculous. The government pays for things, and that money goes into the pockets of workers who, in turn, also pay for things. Tax money circulates the same way all money circulates, but even more so. The government needs to invest for a while; if we’re going to borrow as much as we do, all of the money we borrow should be going to increasing revenue and reducing the debt burden for our children, grandchildren and even great-grandchildren, if we continue electing Republicans to office.
We need to invest in 21st Century technology, especially those designed to wean us off fossil fuels. We need to invest in solar, wind and geothermal systems, which would create millions of jobs and virtually eliminate deficit spending. We need to raise the minimum wage to something livable, which would have multiple benefits; in addition to creating more tax revenue, it would also reduce the amount governments have to spend to support people who work, but can’t support themselves. Face it; not everyone can be a doctor, lawyer or CEO; someone needs to pick up the trash and build and repair things. And, of course, being the only major industrialized nation in the world without a comprehensive transportation infrastructure, we could invest in that.
The best way to reduce the deficit and start paying down the debt, ironically, is to forget the deficit right now and invest in our future; more infrastructure, technology and education and new markets for goods and services, and the deficit problem will take care of itself, like it did when adults ran the government at one time.