Monday, November 17, 2008
Singing a different tune
“I want it all ... and I want it now,” was released by the rock group Queen almost 20 years ago and was given new exposure earlier this year as part of a bank’s TV commercial that essentially encouraged people to max-out their credit cards when they wanted a big-screen TV now.
While the song was the product of a British group and became an anthem for various political movements in other parts of the world, its use in a buy-now credit card ad is quintessentially American.
The bank was only piggybacking on a theme that was been playing continually in Washington for 50 years. Consider some of the numbers coming out of the nation’s capital.
Since 1958, the national debt grew from $276 billion to its present record high of $10.6 trillion. Adjusted for inflation, the 1958 deficit would be about $2 trillion in today’s dollars. We should point out that the national debt in 1989, when Queen recorded “I Want it Now,” was $2.8 trillion. Adjusted for inflation, that would be about $4.7 trillion today.
The time it is taking for the nation to double its debt is getting shorter and shorter. We’re spending as if there is no tomorrow.
In October, the first month of the federal fiscal year, the government ran a record deficit of $237.2 billion, close to the deficit the government ran for the entire year of 2006.
The deficit for this year could run over $1 trillion, dwarfing the record deficit of $454.8 billion set in the fiscal year just ended. It’s those accumulated budget deficits that make up the national debt, which is likely to break $11 trillion by the time President George W. Bush leaves office.
The debt is more than an economic abstraction; it has political and real-life implications. Congress must appropriate the money to pay the interest on that debt each year, and that rapidly growing interest payment competes with other government programs.
Heavy interest
The Treasury reports that interest on the national debt in fiscal 2008 was $451 billion, which is almost as much as is spent on defense, excluding the wars in Iraq and Afghanistan (which are funded separately.)
October’s record deficit reflects the first payouts under the $700 billion bailout fund and the $21.5 billion the Bush administration pumped into the mortgage market.
We’ll stipulate that this newspaper has encouraged some of those expenditures, especially during the current credit crisis, and is willing to support others, given the threat to the future of General Motors.
But for years, we have joined a sometimes-vocal minority in government, a passel of think -tank economists and a chorus in the press calling for more fiscal discipline. We’ve all been largely ignored.
Now, the nation is faced with a real dilemma. There are essentially three ways of dealing with deficits: economic growth, spending cuts, tax increases — or some combination thereof. We’re not going to grow our way out of deficits in the beginning stages of a recession. And raising taxes and cutting spending would only exacerbate the recession.
We’ll all be paying the piper for a long time for all those years of wanting it all and wanting it right then and there.