Our Nation's Debt is in Fact the Individual Debt of Each American ... More Accurately, It's Going to Be the Debt Owed by Our Kids and Grandkids

We hear lots of noise these days about the excessive national debt we have at $16 trillion and counting.

Occasionally we even hear talk about the other approximately $100 trillion in unfunded entitlements for such things as Social Security and Medicare promises. We'll be adding ObamaCare to the mix of future obligations real soon.

Talk's cheap and all we ever seem to get is talk. Sometimes I wonder if we're really aware of the dangerous situation our nation faces.

Whenever as a nation (or as individuals, for that matter) we spend money we don't have (and about forty cents of each dollar the federal government spends is money we don't have), and therefore have to borrow, our country's debt level grows.

To say that our nation's debt level is out of control is an understatement. Yet we continue to do nothing about it other than talk about it. Meanwhile, the debt grows.

But now there's a new group trying to call our attention to what's actually happening and what will be the future consequences of our continuing inaction concerning the debt load if left unchecked.

Your Tab for the Debt tells us about a new group called Ending Spending which is attempting to spell it out:

"For the past three decades, the conventional wisdom in Washington has been that no one ever lost an election running up the debt. That's because the debt—which stood at less than $2 trillion in the early 1980s and now is near $16 trillion—is an amorphous concept. Everyone knows it's bad but no one has any concept how it affects them personally.

That may start to change. A new group called Ending Spending is dedicated to trying to personalize the debt so that average Americans can conceptualize how it will make their life worse in the future.

A new study by Stanford economist Michael Boskin estimates that the debt, if left unchecked, will have "severe negative consequences" for family incomes over time. The debt will reduce the average family income by 10 percent in 2030, by 17 percent in 2040 and by 30 percent by 2050. So if the average family could be expected to be earning, say, $80,000 a year by 2030, their actual pay would be $72,000, and $8,000 of income would be wiped out by the debt.

The Ending Spending Action fund started running newspaper ads in New Hampshire to alert voters that the debt is like a malignant tumor eroding growth and incomes over time. It asks families "what will you cut?" from your budget to accommodate the debt. Groceries? Health care? A family vacation?

The ads pin plenty of the blame on President Obama, who promised to cut the deficit in half and called George W. Bush's deficits "unpatriotic." Mr. Obama's deficits have been twice as high as his predecessor's. And the ads remind people that when Treasury Secretary Tim Geithner was asked what the Obama White House plan was to reduce the deficit, he responded: "We don't have one."

If ever there were an election in which the national debt should be on voters' mind, it's this one. If Mr. Obama wins it will be a vindication for those who believe that running up the debt isn't a priority of voters. The Ending Spending Action Fund, founded by investor guru Joe Ricketts, is trying to prove that the conventional wisdom is wrong."

SUMMING UP

Debt is a present obligation which requires future payments of interest and principal to extinguish. That's pretty simple stuff.

And if future earnings must be used to pay interest and principal on pre-existing debt obligations, that leaves less for MOM based spending.

In nice round 'ballpark' numbers, excluding current interest payments, our national government spends $3.5 trillion and collects $2.5 trillion.  That's a pre-interest deficit, aka primary deficit, of $1 trillion.

And if we someday soon "only" owe $20 trillion and have to pay 5% interest on that debt, that's $1 trillion for interest alone. Nothing for principal reduction, and our current $1 trillion deficit is doubled to $2 trillion.

Of course, we're ignoring the $100 trillion in unfunded entitlements.

What's so hard to understand about all that? Maybe the new Ending Spending Action Fund can get us to DO SOMETHING!!!!!!!! Let's hope so.

Better yet, let's ask ourselves why we continue to stick the kids and grandkids with the future bills for the deficits we are running up today in the name of "fairness?" Fairness to whom?

Not to the kids and grandkids. That's for sure.

Thanks. Bob.