Thursday, December 08, 2011
Twelve Trillion or Twelve Zeros
The current US debt is at 12 trillion dollars and counting up. Each minute the ticker goes up and continues to climb each day. It is mind boggling to even count 12 zeros after a number, let alone 12. Every year we hear of congress and the president working on debt reduction, and lots of debate on what steps to be taken to reduce the deficit. In years and years of piling up the debt, the money set aside for interest on servicing the debt is larger than the budgets of many a countries in the world. Every couple of years there will be a big debate between congress and the president and talk of government shut down, and they always work out ways to compromise and make the deficit bigger and bigger. Not since the days of President Clinton, annual budgets have been revenue positive. Many years have gone by with the annual deficits getting larger and larger, and debt servicing getting to be a bigger and bigger part of the annual budgeting process. Years of multiple wars, natural and manmade disasters, poor planning, unemployment and other unplanned and unprepared activities have haunted the national budgets with excessive spending beyond what is expected from the economy to generate revenues to sustain the spending process. Individuals have been facing increased unemployment and reemployment has been challenging. High wages, benefits and perks are a thing of the past in the US economy nowadays and just holding on to a job has been more than magical. Daily stories of young people moving back with their families are very common, and putting perspective on the economic system is all but impossible. Thinking of the twelve trillion debt and servicing the debt is humanly incomprehensive, and will require a stomach with iron lining. By simply calculating the individual burden of the enormous debt will make one wonder the possibility of someday making interest on debt the largest item on the US budget process. If really planning to eliminate the debt burden is discussed by the congress, it may never have a beginning or ending to the discussion, as there will never be a real debate on how to solve the debt crisis, as no one has an answer to how to address the debt burden now and its ever increasing number. No one is willing to make concessions on their current benefits and will only use the budget deficit as an election ploy to point out that the president and the party in power has done nothing to cut it down or take long term steps to eliminate it. The biggest congressional battles are to increase the debt limits rather than cut them. There are always plans to cut spending but never get implemented as the individual congressmen and congresswoman will always pitch to preserve their own vested interests. The economy is independent of the congressional decision making in pushing prices higher and individuals working hard to make ends meet. There is crisis in European countries and many of them in need of bailouts from the EU or other major global players. Their situation is as bad if not worse than the US budget deficits. There is an enormous amount of impact on the global trade with countries suffering massive budget deficits, and not doing enough business with each other. To help the US economy the other trading partners should be strong and be able to pay their bills, and at this stage every country seems to be struggling to keep their own economies together. Even the Chinese have slowed down in growth to help with trade with USA, although they also run massive trade surpluses with the USA. There is no quick fix to the massive debt burden, but immediate steps are necessary to stop the increased burden on the US balance sheet. More innovation, cost cutting that may not be appealing to the public, tax structure that may help with increasing revenues and across the board spending decreases will help decrease the debt burden, and will start to help reduce the trillions owed and additional trillions in interest payments. It will be a long road to debt free budgets, which may not be possible if continued congressional dilly dallying on compromises that make no fiscal sense.