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Calm Down, Government Debt Won't Kill Us

By Kevin Spak, Newser Staff

Posted Mar 4, 2009 12:11 PM CST

(Newser) – Republicans have become born-again deficit hawks, decrying the debt President Obama is handing America’s grandkids. “What’s missing,” writes Steven Pearlstein in the Washington Post, “is any sense of perspective.” The added $2 trillion pales before the $66 trillion spent annually on Social Security and Medicare, and could be paid back in a year, if the US cut spending 15%. That would hurt—but not as much as doing nothing about the recession.

Government debt is notable, but in the past decade, household debt and business debt has doubled. Now, all that debt is being deleveraged. That ought to be a good thing, but with everyone doing it at once, the government needs to spend to prevent a downward spiral toward depression. The grandkids will be glad it did.

[Images (2)]

[Quotes (2)]

America's on a path to saving more. (Shutterstock)

The National Debt Clock is shown near Times Square, Oct. 8, 2008. The clock has run out of digits to record the growing figure. As a temporary fix, the dollar sign has been switched to a "1." (AP Photo)

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The thing to remember is that debt is debt, no matter where it is, and unless it's paid back, all of it will get passed on to our grandchildren in some way. - Steven Pearlstein

From a purely cash-flow point of view, substituting 18% credit card debt with 3% Treasury bond debt is a positive development for the grandchildren. - Steven Pearlstein

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COMMENTS

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Showing 3 of 9 comments

Guest

Mar 27, 2009 1:59 AM CDT

Now this is just stupid. In 2008 we paid $451 billion in interest on the national debt. Already this year, we have paid $149 billion. And that number will grow dramatically as the national debt increases from $11 to $14 trillion, nearly instantly. Not only the debt, but the growth of debt is unsustainable. And what a comment: "The US just needs to cut spending by 15%...". This deserves a whack with a 2X4 - when has the US government EVER cut spending? Our government can't even cut rates of increase in spending, much less spending itself. And at the rate we ARE spending, a 15% cut would no doubt cause another steep recession. Government must stop this spending - we cannot buy ourselves out of debt crisis - and that is exactly what we are trying to do. Homeowners did this for years. Once the credit card bills got too high and anxiety with them, we refinanced our homes and paid them off. We felt so happy! Then we ran them up again. Now we have to pay the piper, house prices have fallen, and we are in economic crisis, because we could not stop personal spending. Whay the WP would present spending differently for the government than for you and me boggles my mind. It just boggles my mind. "Oceana good...Eurasia bad" (Orwell).

Snowleopard

Mar 6, 2009 8:04 PM CST

yeah, agreed. I wasn't condoning that approach, just acknowledging the option, although I don't think the free-market fundamentalists are willing to accept how messy it'll be if government takes a hands off approach. I think point it seems like nationalization is the only real option.

Doctor-Zaius

Mar 4, 2009 3:35 AM CST

The problem with "Wiping the slate clean" is that the 95% of people making less than 250k per year are the chalk that will be "Wiped clean". After the depression the extremely wealthy were the ones who came in and bought up everything on the cheap.

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