Our Nation’s Crushing Debt as a Moral Hazard

For most of us as Catholics, we probably associate “stewardship” with that time of the year when the priest or parish council ask us to commit to making contributions to the parish for the coming year.

Stewardship is not only about giving money away, but about making wise use of the resources to which we are entrusted.  And an essential part of that stewardship is to preserve resources for use by the next generation.  As a nation, we are failing that responsibility — and failing miserably.

Each person in America today — every man, woman, and child — owes more than $30,000 in national debt.  And it will only get worse, rising above $100,000 per person over the next two decades.

If nothing is changed — indeed if there is not dramatic change — the next generation will drown beneath a sea of the debt.

Simply put, America faces no greater danger today than the crushing national debt.  No greater threat to a secure safety net for all Americans exists than the uncontrolled growth in entitlements, which eventually will crowd out all other discretionary spending and, in any event, is itself unsustainable.  No greater obstacle to prosperity for the next generation of Americans is before us than leaving them with the bill for out-of-control federal spending.

But you wouldn’t know it from hearing President Obama’s inaugural speech this week.  He could barely spare a word for the deficit, other than to argue against any meaningful spending cuts and apparently pledging his vociferous opposition to any reform of Social Security, Medicare, and Medicaid.

And you wouldn’t know it from President Obama’s concerted actions since the election, as he has steered away from the balanced approach that he promised during the campaign.  Yes, President Obama campaigned for higher taxes on higher-income individuals.  But he promised to combine tax increases with spending reductions.  When the fiscal cliff approached, however, President Obama demanded only tax increases while refusing to agree to any limits on spending.

Immediately following the election, I was optimistic that President Obama would seize this opportunity to move toward meaningful reform of entitlements and to arrest runaway deficits.  As I wrote here on Mirror of Justice, I thought that he would want to be remembered as a President who got the nation’s fiscal house in order, rather than the President who bankrupted the country.  The President appears determined to prove me wrong.

Commenting on the inaugural address, Peter Wehner at Commentary writes:

He is fully at peace with running trillion dollar deficits as far as the eye can see. He not only won’t lift a finger to avoid America’s coming debt crisis; he will lacerate those who do.

In the end, though, President Obama’s concern for the less fortunate is at war with his insouciance about trillion dollar deficits:

* The greatest opportunity for those of lower-income and the strongest hope for a secure safety net is a growing national economy.  The huge national debt is a constant downward pressure on the economy, suppressing growth below what it otherwise would be and leaving more Americans unemployed (and underemployed) and incomes stagnant.  A weaker economy also means greater demands on social services with fewer resources available to meet those demands.

* This year, the United States is projected to spend $224 billion of taxpayer money for interest on the national debt.  With President Obama’s deficit spending, the interest due will more than double to $524 billion in a decade.  That’s more money than the federal government spends on education, transportation, veterans affairs, etc.  And that’s money not available to help anyone or strengthen any social welfare program.  Think of what we could accomplish today if we could use that money, instead of transferring it to China and other holders of American debt beyond our shores.

* The Obama trillion-dollar deficits are simply not sustainable.  Unless entitlements are reformed, and President Obama has signaled retreat from his earlier acknowledgment that such reform is essential, we will reach a point in which the government has no money left to spend on any programs other than Social Security, Medicare, and Medicaid.  The current projection is that we’re only about twenty years away from a situation where all federal revenues are consumed by these three programs, as they are further extended by Obamacare. 

* When the day of reckoning arrives on the national debt, the poor will be in the most vulnerable position.  When the desperate scramble comes over the shrinking revenues available for anything other than entitlements and interest on the national deficit, the poor and disabled and otherwise disadvantaged are likely to end up on the short end.

President Obama hopes to be remembered for enhancing social justice and equality.  I have no doubt that he is sincere in that hope.  But unless he faces fiscal reality and becomes an energetic advocate for entitlement reform and deficit reduction, he instead will be remembered for his out-of-control spending and doubling the national debt during his time in office.  This period in American history will be held up as an object lesson for reckless spending and economic delusion, likely followed by an era of severe economic and fiscal retrenchment that maydepress the American dream for a generation.

There is still time for President Obama to show leadership and secure his social justice vision by meaningful entitlement reform and reduction of deficit spending.  Based on the President’s words and actions since election day, I am no longer sanguine about the prospects.