Interest on the National Debt
by Rabbi David Eidensohn
President Bush neglected to talk about the national debt in his State of the Union. He had no solution for it, so he ignored it. However, we may not ignore it.
We discussed the national debt in our previous article. Now we want to clarify how the national debt is devouring our resources, and setting us up for national chaos. Basically, our message is that the national debt will continue to rise, as it has in recent year, by incredible jumps. These jumps are fueled by two things: One, the deficit, which this was 347 billion dollars. And two, the interest we have to pay on the national debt of eight trillion dollars, which this year came out to 352 billion dollars in finance charges. Both of these factors, however, pale besides the 11 trillion dollars in Social Security Payments due to the next generation to retire. Thus, we have now a national debt of eight trillion dollars, growing rapidly, and we anticipate in a few years 11 trillion dollars additional borrowing for Social Security payments. Our national debt, within a decade or so, may be 20 trillion dollars. Our income is about two trillion dollars a year. (Some say that the new drug program enacted to begin January 20006 will rival Social Security in its price.)
We now pay about five percent interest to sustain our national debt. What will five percent of 20 trillion dollars be? It will be one trillion dollars. Thus, within a decade or so, we may well pay one trillion dollars, or half of our income, just for interest in the national debt. But what if people don't like to lend us money at five percent when we are ready to collapse financially? Then the debt rate may easily rise to ten percent. At that point, all of our income, the two trillion, will go for debt services or interest, and we will have nothing to live with. We will be bankrupt.
Our industrial production growth rate is 3.2 percent, the exact rate of inflation, which means that we have no industrial production growth. Major industries have left our shores to go to China, so that American billionaires can become even richer, and then they come to Congress and demand easy taxation to benefit the economy!
So we are headed for the brink. Why doesn't President Bush talk about this problem in his State of the Union address? It is not really his fault. Alan Greenspan and all economists have been talking about this problem for decades. But the politicians are unable to do anything about it, or unwilling to do so. Even in the Clinton years, when we had surpluses of trillions of dollars, we paid down very little of our national debt. People figure, and the politicians know this, if there is a surplus, I want it now. A democracy will not easily give money to the government when they can take from it. Therefore, even when the government has a huge surplus, the political process will not allow the government to pay down the national debt. The people want to take and don't want to give. The politicians know if they complain they will lose their job. Last year, a courageous Southern governor fought for fiscal integrity and lost his job. People don't want fiscal integrity. They want less taxes and more benefits.
Thus, we the people, united, dedicated to ourselves and not to the future, will take and take until those who lend us want higher rates, and higher rates, until...
(After we wrote this, President Bush revealed the new budget. It is even worse than we spoke about here. Nothing about closing down the national debt, with a huge deficit. To see it, click here.)