The Great Debt Debate: THERE IS NO RISK OF DEFAULT!!!!!!

I really have no idea how many people still read this blog. BUT, if you do, if you happen to be one of the faithful ten or so readers who still subject themselves to my rants regarding the utter madness that our economy has become, PLEASE email this blog entry to everyone and anyone you know. For those of you who know me personally, you can attest to the fact that although I am not always right, I am intellectually honest and will only present the facts when professing to do so. That being said, I have done my research and crunched the numbers and I am simply unable to remain quiet regarding this convoluted Desperate debt debate. So, being true to the nature of this blog, I will attempt to break the situation down in the accessible and simple manor in which it should be discussed.

First, let's define the terms. Default: Not paying all or some of a payment, in a timely and agreed to fashion, that one party is contractually obligated to pay to another.

Debt (as it relates to our government): Almost exclusively and entirely made up of bonds that are issued via the full faith and credit of the federal government to investors.

We are in no risk of defaulting on our debt. We just aren't. Our government brings in roughly (give or take a billion) $200 billion a month. Our interest payments on all bonds, social security, medicare and medicaid, military costs (including all additional war costs and veteran benefits), add up to about $165 billion. Now to be fair, our other costs that do include social programs and other entitlement programs do add up to more than the $35 billion remaining. Cutting back on these programs or not funding them does not equal a default. It actually would have the opposite effect. If we made hard and meaningful cuts into these social programs we would most likely preserve our AAA debt rating by reducing our long-term commitments and liabilities. For the record, I am not suggesting that this would be easy or even that it is the right thing to do. I am simply illustrating that we have no real risk of default unless our government consciously chooses to not pay our debt.

As far as the aforementioned cuts to social spending and entitlement programs, it is not something I support unequivovally. No matter your view on entitlement spending, making deep and meaningful cuts into social programs is a painful enterprise. One must approach the matter with a sense of sobriety, knowing full well that such cuts will impact struggling families and hungry children. At the same time, we must acknowledge that the tens of trillions of dollars that have been spent on social programs since the inception of LBJ's heralded Great Society programs, the poverty level in this country has risen from 14% to 14.3%. You can draw whatever conclusion you want to but the numbers don't lie. Is it possible that the more we spend to help the poor we simply create more poor? Is it possible that the more comfortable, palatable and dignified we make living in a state of poverty that we are simultaneously encouraging more Americans to join the ranks of the impoverished? I am not, and will never, suggest that we should end social programs. My wife and I are ardent believers in helping those less privileged, both with our personal monies as well as our tax dollars. Yet, when looking at the cold hard numbers, we must take a serious look at how we are spending the money and examine whether or not we have pursued the correct course and philosophy as it relates to helping out our fellow man.

The other aspect of this debt and spending debate that seems to get ignored by both parties is the unsustainable nature of our out of control spending. REGARDLESS of how necessary you believe that any or all of the innumerable amount of social programs are, you cannot ignore the cost. We must all wake up to the fact that the government is spending ACTUAL money. The government does not have access to some magical bank account with supernatural replenishing powers. Therefore, the governments first concern should always be taking care of and carefully managing its main source of funding, the taxpayer. It is immaterial what programs you believe to be necessary and moral if the money does not exist to fund them. Furthermore, how compassionate is to recklessly spend and borrow to fund certain social programs while simultaneously straining our tax and borrowing base to the point of endangering ALL government programs. Additionally, we must cease looking to the taxpayer, whether rich or middle class, to pick up the ever expanding tab. If that worked, the EURO zone and its 50-60% tax rates would be amply funding their social spending. The fires burning in Greece and Italy (Spain will be there shortly) would suggest otherwise.

Cutting budgets and spending is never fun. You have to be a sadist to truly delight in the slashing of social programs. But I find it to be a much more bizarre and sadistic practice to endanger the solvency and existence of this great republic by the fervent refusal to curtail spending. Should we include such things as military and law enforcement? As unpalatable as that may be to the majority on the right, the answer is simply yes. There is waste to be trimmed in all areas. But, we must keep in mind what the ultimate goal of this Union was upon its founding. This country was based on the aim of securing life, liberty, and the PURSUIT of happiness. As one of my favorite movies points out, this country is obligated to give you fair shot at happiness. Even in 1776, our forefathers knew that we could never make happiness a certainty. Therefore, our spending must always be dedicated, first and foremost, to the preservation of our union and the safety of her citizens. We absolutely cannot risk our future solvency and survival in the hopes of securing and guaranteeing the comfort and happiness of all our citizens. That would truly be the pursuit of destruction.