" We seem not to have perceived that, by the law of nature, one generation is to another as one independent nation to another."
- Thomas Jefferson
The current official national debt is about $16.4 trillion. It is estimated that it will reach $23 trillion in 2015. Every year, the Federal government collects $2.5 trillion in revenues and spends $3.5 trillion.
When one includes the debt of all households, businesses, state and local governments, financial institutions, and the Federal government, the total debt reaches $58 trillion or almost $185,000 per citizen.
When one considers programs that we have yet to find a way to pay for, such as the projected extra strain on Social Security and Medicare over the next decade, our total unfunded liabilities are over $122 trillion, or about $1 million per income taxpayer. Our total national assets (including business, household, and even nonprofit assets) are only $93 trillion. That means even if the government sold all public and private assets to cover our unfunded liabilities, we would still be about $30 trillion short.
Some people try to argue that the United States was in a similar debt crisis at the end of WW2, but the explosive growth after the war got us out of it, and therefore this current crisis is simply imaginary. What these people are forgetting is that after WW2, our government drastically cut spending (after all, a world war just ended), and every single one of the U.S.'s major economic competitors was either crippled or destroyed. The United States almost totally avoided any internal damage and thus had nothing in its way to stop it from becoming a economic powerhouse. We also did not have the outrageous amount of unfunded liabilities that we have to deal with today.
What most of America's main economic competitors looked like post-WW2.
And yet what's the answer from D.C.? Kick the can down the road. Let the kids deal with the debts we incur. Politicians don't want to take steps toward unpopular spending cuts because they don't want to risk losing votes from the people who enjoy those benefits or the businesses that are profiting from government spending.
The solution? To get out of debt, our government has decided to spend more and take on more debt.
That's why after breaking through the debt "ceiling" several times without any considerable spending cuts, our elected officials are yet again readying to raise the debt limit. They wrongly believe that by simply throwing money at the problem, we can stave off what's really an inevitable economic catastrophe.
So either way, we've dug ourselves into a hole. Do we climb out or dig deeper? By kicking the can down the road and ignoring this spending and debt crisis, we lengthen the recovery process we'll inevitably have to go through. There is going to be hardship either way, but the sooner we deal with it, the sooner we'll recover. It's like choosing to go on a diet after you gained ten pounds as opposed to going on one after you gained 40.
In a letter to James Madison, Thomas Jefferson questioned about whether one generation of men has the right to bind another to laws, debts, etc. Believing it was a crucial question regarding the principles of every government, Jefferson answered wholeheartedly in the negative:
"I set out on this ground which I supposed to be self-evident, 'that the earth belongs in usufruct to the living;' that the dead have neither powers nor rights over it . . . no man can by natural right oblige the lands he occupied, or the persons who succeed him in that occupation, to the paiment of debts contracted by him. For if he could, he might during his own life, eat up the usufuct of the lands for several generations to come, and then the lands would belong to the dead, and not to the living, which would be the reverse of our principle."
If only our current representatives were this responsible. Instead, our government is essentially paying off credit cards with more credit cards; all backed by the assumption that eventually those who are children now will somehow be able to pay our bills after inheriting an economy that was bled dry by our absurd amounts of debt and spending in the first place.
Back to work, kid. Someone has to pay off the national debt.
Luckily, Thomas Jefferson proposed a possible solution. He suggested a possible amendment to the Constitution (which was being debated at the time of his writing the letter) that prohibited the legislature from contracting debts that it could not repay in full within 19 years, which Jefferson considered the duration of one generation, and voids any debts not paid within that time-frame. Jefferson stated:
"This would put the lenders, and the borrowers also, on their guard. By reducing too the faculty of borrowing within its natural limits, it would bridle the spirit of war, to which too free a course has been procured by the inattention of money lenders to this law of nature, that succeeding generations are not responsible to the preceding.
On similar ground it may be proved that no society can make a perpetual constitution, or even a perpetual law. The earth belongs always to the living generation. They may manage it then, and what proceeds from it, as they please, during their usufruct."
Unfortunately, an amendment like that would be shot down instantly by the big government fetishists. So for the time being, you and I will continue to have to live within our means, paycheck-to-paycheck, while the government spends like a drunk in Las Vegas.