Focus on financial meltdown obscures bigger problem

By John J. Sponski
Guest Columnist
Published: September 26, 2008

After the failure of Lehman Brothers and the purchase of Merrill Lynch by Bank of America, now the media and most everyone in America is concerned about the condition and reliability of financial institutions. It is unfortunate that there has been no clarion call by our elected officials or media pundits concerning a far more pressing and sustainable problem.

America has more than the current financial industry upheaval. I cite specifically the current and deteriorating condition of the federal government’s finances and its oppressive debt burden on current and future taxpayer generations.

Recently, the nonpartisan Peter G. Peterson Foundation published a primer titled “The State of the Union’s Finances.” This document shockingly discloses the abysmal condition of the federal government’s financial management.

Currently, and this is before the “Mac and Mae” underwriting by the government, every man, woman and child in America bears a “federal government borrowing burden” of $175,000. The federal government was in an approximate $51 trillion (that is a T not B) fiscal hole as of Sept. 30, 2007.

Each year the federal “credit” hole gets deeper by $2-3 trillion (again a T not B) yearly. We hear about current budget deficits of $400-500 billion, but what we do not hear about is the interest due on these federal borrowings together with the increasing cost for mandated “entitlement” programs, such as Social Security, Medicare and Medicaid to list the major ones.

Has anyone heard any member of the present administration in Washington or any of the candidates for national offices mention the oppressive debt burden on current and future generations of Americans? Has any candidate or pundit offered any plausible solutions to reduce this fiscal calamity we are in?
Consider the mortgage you may have on your home or farm and understand that you and your family presently owe, as a taxpaying household, an additional $455,000 for interest and principal to be paid on the accumulated debit of the federal government.

So the next time you hear or read that the Congressional Budget office predicts a federal budget deficit of $400-500 billion for the current fiscal year, remember that monies will be borrowed with interest by our government from foreign investors (more than 45 percent of present federal debt is currently held by foreign countries, a significant and disturbing increase from the 19 percent level in 1990 and the almost seven percent level in 1946, thus the accumulating debt burden).

If this overwhelming debt burden is not addressed now, the time will come (in the not too distant future) when the federal government and we taxpayers must pay each year more for interest and debt reduction than we are able to spend for discretionary items in a budget.

This is not a problem that can be put off – already our past failure to act has placed an unwelcomed commitment on our children and grandchildren and their children. Demand that candidates for national office and current holders of those offices acknowledge the debt burden and put forth solutions to stop running the federal government on “credit cards” from foreign countries.

(Guest columnist John J. Sponski is a retired Bank of America executive vice president and a resident of Locust Dale.)