Thursday, February 02, 2006

National Debt

One of the things that gives me a queasy feeling is the level of debt in the United States. Headlines over the past few weeks have announced the bad news that not only are Americans not saving, they're borrowing. The national savings rate this year was in the ballpark of -.05%. These savings levels rival those of the Great Depression. But, back then, they had a good excuse for not saving.

Now, as the income gap widens, as more people earn stagnant or fewer wages, as the cost of medical care increases, and as oil prices surge (thanks to ExxonMobile, which made $10 billion in profit last year) it should not be a surprise that fewer Americans are saving. But, the lack of savings across the board can't be explained solely by these factors. Economists speculate that the housing bubble (Thanks, Alan Greenspan) has created a false sense of security in Americans. They use the hypothetical equity in their houses to take out home equity loans and to rack up credit card debt (a crippling equation if there ever was one) in order to buy cheap goods coming from other countries--the same countries (especially China) that are buying all of our debt.

Our federal government isn't exactly setting a good example of fiscal responsibility. President Bush claimed in his State of the Union that he has reduced the amount of non-war-related spending, but that spending only comprises 16% of the budget. The rest of the budget is balooning at 42%, according to the Congressional Budget Office, a spectacular increase. This year's deficit will be, check this, an estimated $337 billion dollars. The President hearalded that by 2009 the deficit would be reduced to $241 billion dollars, but as Factcheck.org points out, that doesn't include what would happen if his tax cuts were made permanent.

All of this news makes me want to stuff my money in a mattress, buy guns, unhook from the grid, grow a vast vegetable garden, learn Mandarin, and prepare for the inevitable economic disaster. If only the rest of America were as concerned.

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