Monday, April 21, 2008

"It's Your Money"

For an old government hand, nothing is more infuriating than the anti-government slogan: “It’s your money. You know better how to spend it than the Feds do.”

Well, looking at the record of this administration, they may actually have a point. Certainly, ordinary American citizens would know better than to run up a deficit in excess of $1.6 trillion as the Bushites and four irresponsible Congresses have since FY 2002, right? We’ve borrowed enough to cover that shortfall, increasingly from foreign creditors. Sorry, kids and grandkids, but you’re expected to pay that back.

But wait, maybe the citizenry is not so smart after all. Over the same time span, according to the Federal Reserve, collective household debt has doubled from over $7 trillion in 2001 to over $14 trillion today. Sorry, kids and grandkids, but you’ll be expected to repay that debt, too.

Let’s say that the youngest 200 million of you will share that responsibility equally. Eight point six trillion divided by 200 million is “only” $43,000 per capita. Think of it as a year of that Ivy League education that you never had.

Of course, not all of you will suffer equally. The IRS says that it fails to collect $345 billion a year from tax scofflaws. Those folks -- and they know who they are – will ride at a reduced fare. There’s just one more burden that the honest ones among our kids and grandkids will have to bear. Sorry.

There may be a ray of hope -- career change. If you play with other people’s money, you can make a fortune – even when you foul up. Consider that the top10 – yes, ten – hedge fund managers “earned” a collective $16.1 billion last year, according to Alpha Magazine. Based on a 2,000 hour work year, their hourly rate would exceed $800,000. And we complain about lawyers, movie stars and A-Rod? Better, yet, J. P. Morgan paid top executives at Bear Stearns a cool $500,000 each to stay on after the latter was rescued at a government-backed fire sale. Wait a minute, aren’t these “indispensable” executives the same ones who destroyed 98 percent of Bear Stearns’ market value? See, kids, it’s a matter of what line of work you choose and whether you think that honesty pays.

This is no “rough patch,” as the President still insists. No, our economic system has stopped working for many of those who cling to American values, and our political system is so beholden to the special interests that it can’t begin to address the real issues of the economy. Those who say that American political campaigns are “too long” may have a point; apparently no amount of time is adequate for an honest debate of real solutions to real problems. Sorry, kids and grandkids.

Charles Blum


  1. Mr. Blum, I thought you might appreciate this from a respectable news source:

    In all seriousness, you are correct. It is pure myth that the Republican Party is the party of fiscal conservatism. Republicans, like their donkey counterparts, are simply big government conservatives. The only difference is that Democrats want to raise taxes for their spending while Republicans will actually cut taxes while massively increasing spending. I say, sweep the bums out.

  2. I wouldn't rush to heap blame on Americans for household debt. Bear in mind that much credit card debt is a result of medical expenses. For many Americans, Visa is their health and auto insurance. When wages are stagnant, easy credit is like a lifeline and it never occurs to many that they will have to pay it back with interest.

    The Federal government has no such excuse. It is simply acting recklessly.

  3. I hope I have been clear in spreading the blame amongst the executive as well as the legislative branches and both major parties. The point of most of my recent comments is that our political system has let us down just at the time when we need it to perform best. We can't even get candidates to address serious issues in more than a sound bite. I, for one, want more from all of them.

    As for Anonymous #2's contention that Americans have borrowed an additional 7 trillion dollars in this decade to cover health care costs: come on! If that were true, we'd have reformed that system by now. Walk around suburban neighborhoods and note the McMansions with two new cars out front. We have grossly overconsumed as a society for a long time now. That said, please go back and review our earlier posting on why America needs a consumption tax. If you want to address the problem of stagnant wages, tax imports fairly and end regressive income and payroll taxes. THAT is the debate we ought to be having in this campaign!