Monday, July 04, 2011

Congress, president should impute the responsibility for debt issue to individual Americans

Congress will have to keep working on the debt ceiling this week, having been jawboned back to work. And last week the president did list some vague warnings about what could happen quickly if come Aug. 2 the government cannot borrow money and cannot pay its bills.

I think the president should, soon, bring all this down to earth. I think he should project the debt and deficit (two different things) down to each individual American. For example, the national debt comes out to about $35000 per person in the U.S.  (Look at the calculation on "How Stuff Works" here.)  Suppose there was some way to try to “collect” this immediately?  It’s a number comparable to the credit card debt, but probably much less than the mortgage (even if upside down), for many people.

One could make a similar calculation with the deficit.  Since it’s about $1.4 trillion in 2011.  It’s something like $4600 per person in the US.  Personally, that’s like increasing a credit card debt by that much every year.
One place to hit would be retirees, not just future, but now.  With social security, it should be possible to calculate just how much of any retiree’s benefit was actuarially justified by his or her FICA taxes (including spouse’s).  That may be decreasing because of longevity. It’s also possible to impute some of the national debt because in effect some of the social security trust fund has been squandered by the IOU mechanism.  That could result in a percentage for an immediate cut in benefits, starting in September.  Some commentators on CNN have warned that this could really happen.

All kinds of moral debates can ensue, mostly reviewing the tone of the debates over social justice and “deservedness”  in the 60s and 70s.  Talk about redistribution of wealth. Talk about means testing.  (Medicare, I won’t even go there now; it’s too scary.) There’s no question that the moral case would be made for increasing taxes on “the rich” now, even as counter arguments are made (by the GOP) that the “rich” provide jobs.  Our commitment to longevity and the sanctity of human life can be tested if we talking about cutting off seniors, because they have already “had their turn”.   (Perhaps the “natural family” crowd butts in, and preserves those who have taken the responsibility to raise families, but dumps the childless.)  But all of this can get dangerous.  It’s so easy to rationalize any base set of moral “postulates”.    

It seems that all common sense says, the ceiling must be raised by Tues. Aug 2, but that doesn’t solve the problem in the long run. Americans (and western countries) must develop sustainable economies and governance. Yes, I like the idea of private accounts that can’t be taken away by political whims – except that some conservatives will say that even private property is never totally safe from political panic – look at history.
 
McCotter v. Huckabee (6/25/2011):
Christine Romans of CNN explains the debt crisis today:

NBC Washington said on July 5 that in practice a deal is needed in two weeks, in order to have time to get it passed before August 2. More concern is being expressed that social security checks would not go out, or that maybe troops would not paid. And the GOP says "Go on a diet."

I put the pictures of the House Office Buildings (at the July 4 celebration) on this posting for a reason.

Update: July 5

A friend on Facebook provides this link on the "Balkanization Blog" about the legislative history of Section 4 of the 14th Amendment on the debt. 

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