I recently heard a religious leader say that the “welfare state” is good for the poor as he encouraged even more government spending on “social programs.” A safety net for the truly poor is certainly a matter of social justice. But it’s not the only social justice question; before we can even get to such issues, we need a keen consciousness of a fundamental moral imperative – in justice – to run a responsible economic system for the sake of the common good, which includes the poor.
Suppose you are the father of a large family and earn $80,000 a year, but spend $100,000, plus another $20,000 on your credit card. And what if your credit card has a $300,000 balance and every month you merely pay the interest. You’re relaxed because interest rates are low, for the moment.
But your Visa credit card starts demanding principal payments of $20,000 every couple of months. Instead of cutting expenses, you choose to transfer the balance to another credit card, and continue to pay the interest. Instead of addressing the problem, you’ve made it worse. You increase your annual spending to $120,000 even as your annual salary remains at $80,000 – adding $40,000 to another credit card every year. Your personal finances have become a Ponzi scheme as you and your family fall into escalating and crushing debt.
Further, suppose your financial condition is really worse than it appears. You didn’t tell your family you secretly owe another $600,000 for legal promises you made. But the debt is not on a credit card. You’ve convinced yourself that what your family doesn’t know won’t hurt them, just yet. Further let’s assume it’s impossible to declare bankruptcy and your heirs will inescapably have to pay for your huge debt after you die. So your debt is $300,000 (maybe as high as $900,000 with those hidden obligations) and increasing at least $40,000 every year on an annual income of only $80,000.
There are words that would describe personal finances in such a state: Grim. Catastrophic. Irresponsible.
There are about 120 million households in the United States. Imagine if every household spent as recklessly as this fictional family. If you are horrified at the thought, you should feel the same about U.S. deficit spending and our national debt.
The Federal Government has $18 trillion of debt on its “credit card.” Fortunately, interest payments are relatively easy because interest rates are very – and most would argue, artificially – low, at least for the time being. The entire Federal budget is something like $6 trillion (the accumulated debt is $18 trillion). That means to pay off the debt, the Government would have to shut down for three entire years, except to collect revenues to pay off the national “credit card.” (To put things into perspective, the annual GDP – the earnings of the entire nation – is nearly the same as the Federal debt at $17 or $18 trillion.)
In recent weeks the Government was forced to pay down $1 trillion in principal. The Government did so by transferring the balance to another “credit card.” But the Government not only continues to spend more than it collects, but hopes that the “credit card” interest rates don’t go up. In addition, there can be no end in sight in the ever increasing demand to pay off the principal when due, even if other credit companies are able and willing to accept a transfer of debt. (Of course, the $18 trillion debt doesn’t take into account the unfunded liability of Social Security and Medicare programs for the aging baby boomers, which is estimated to be something like $50-$70 trillion!)
If you’re having trouble imagining the magnitude of the problem, return to the family example and add nine zeroes to the numbers. And be afraid, be very afraid.
I’ve noticed that a lot of the clergy hardly ever (well, never) talk or write about the national debt as a social justice issue. But it’s immoral for one generation to steal from another generation. And this happens when a government accumulates a huge debt that can’t be paid off for decades. Every major Western country has the same problem so everyone is frozen in indecision for the foreseeable future. (Greece, for example, is being bailed out by Germany – and Germany bails them out because they fear of a devastating ripple effect of financial instability if Greece defaults.)
Where will this lead? Frankly, I do not place much hope in the financial geniuses. If the experts cannot agree on the obvious humanity of an unborn baby, what makes us think they will get financial realities right? I hope there isn’t a major financial collapse but some experts do not rule that out. My guess – and perhaps best-case scenario — is that there will be rampant inflation in the years ahead because our politicians (and our tone deaf religious leaders) haven’t paid attention to massive government budget deficits and runaway spending.
But inflation is often called “the cruelest tax,” because it affects poor people more than rich people. Could this the reason very wealthy people like George Soros, Bill Gates, and Warren Buffett support big-spending politicians?
Somehow it continues to be easy to support big spending as a “social justice” issue, especially by the clergy. But isn’t it high time for social justice advocates to put the mundane – nay, grim and catastrophic and irresponsible — business of the national debt and the evils of deficit spending on the table precisely in the name of “social justice”?