There was more discussion of Hillary Clinton’s looks and stamina than of the national debt in last week’s presidential debate. In fact, the debt was mentioned but 10 times, and remedy to it was not even discussed. What we witnessed in the debate certainly fits the times, as the debt, deficit, and government spending are no longer even talked about in Washington. We are sleepwalking our way toward a financial crisis, and the eerie silence we have on the debt represents a growing cancer in public policy.
This is not a point of view reserved for conservative Republicans; after all, it was President Clinton’s former chief of staff, Erskine Bowles, who noted that we were marching toward the most predictable financial crisis in the history of man. Admiral Mike Mullen, the former chairman of the Joint Chiefs of Staff, has said that the debt is our most potent threat. And even people like Madeleine Albright, who stands many steps to the left of where I am, have recognised the national debt as a threat to our national security.
So people outside politics at least touch on it, and people in politics won’t touch it. This is hardly a winning formula, when time and the power of compounding interest are working against you. Yet, this is where we are, and this brings me to what you might do to change it. It’s time to make noise. Indeed, it’s the squeaky wheel that get the grease in politics. If only every person at each presidential debate raised the debt issue, if every letter to the editor was on this subject, if every talk show was infused with this topic – politicians would be forced to talk on it too. Congress will react, but what will be vital is presidential leadership. Things can’t change here without it. And given what we didn’t hear on last week, that gives us until the next debates on the October 9 and 19 to awaken the dead on this issue. Here are three reasons why it’s worth your time:
One, Donald is lying to you and Hillary is trying to steal from you when they claim, respectively, that cutting waste in government will solve our problem or that we can add more to the ledger of unpaid for government promises. Trump suggests that a 1 percent cut to only non-defense, discretionary funding (about 15 percent of the budget) over 10 years would balance the budget. You could cut all this spending to zero and not balance the budget. Mrs. Clinton says that increasing taxes on the wealthy would fix the problem. You could take every penny of taxable income from all those earning more than $1 million this year, and you’d fund government for only about four months. I could cite a host of other numbers that highlight our nation’s financial woes, but in short, the financial problem before us is much larger than either candidate is admitting. Pretending it doesn’t exist won’t solve it.
Two, the debt landscape has worsened. The world’s solution to a crisis of too much debt in 2008 was to add even more, and debt since then has gone up by about $60 trillion with a disproportionate amount of this growth coming in government debt. In fact, global debt now stand at an all-time high of 286 percent of world GDP, and even this number does not fully reflect the liabilities found in the balance sheets of central banks around the world. Nor does it reflect the ways in which debt growth has outpaced income growth in the developed world. What’s all this lead to? Pushing on a string – this was the expression at the time of the Great Depression, as Fed activity was not enough to reinvigorate the economy. Mario Draghi, head of the European Central Bank, essentially admitted we were almost there when on Monday he said sustained economic growth would require policy changes – rather than simply counting on central banks to maneuver interest rates ever lower.
Finally, this is not a problem to be confronted by distant generations. It may come much sooner than any of the so called “budget experts” in Washington are suggesting. For instance, a week ago, the Federal Reserve released its latest numbers on household net worth, and they showed an all-time high. Our numbers here have averaged much lower for the last 75 years, and the last times we hit these sort of highs were in 2001 and 2008 – just prior to the tech and housing bubbles bursting. Know that if the economy goes south, the debt will go north. In short, a financial day of reckoning draws ever nearer with each day of inaction, and allowing our presidential candidates to avoid this issue is something our republic cannot afford.