The Cost of Americans' Addiction to Loans

Obama and the Democrats’ version of social justice has turned the tables in the United States so that, today, parents are living at their children’s expense.

Almost 11,000 babies were born yesterday in the United States. Before they could even breathe their first breaths from outside of the womb, each one bore on his tiny shoulders a debt of $53,531, which he will have to repay over the course of his life. This is literally the price he must pay for the madness of America’s sick addiction to loans.

This is the fact that hides behind the amorphous term “the United States national debt” — a distant and evasive concept that enables an entire generation of Americans to become addicted to the illusion that they will never have to pay back this money. Actually, the truth is, it isn’t an illusion — they’re right. They will never have to repay this money; instead, their children and grandchildren will.

Someone will have to pay the $17 trillion that the United States owes — that’s $17,000,000,000,000. Does this mean that in 20 years thousands of angry Chinese bankers will come knocking on the doors of the babies that were born today, demanding this money? Of course not.

But these children will repay the money that their parents are using today to fund an entitlements system that has turned into an out-of-control monster and for years has been in a de facto state of bankruptcy; they will pay higher taxes and receive fewer services from the state. The tables have turned in America, and parents are now living at their children’s expense. This is the Obama administration and the Democratic Party’s version of social justice.

In order to deny this reality, hundreds of socialist theologists are working diligently to construct piles and piles of theories according to which it will be possible to escape paying the debt. At the beginning, the Obama administration turned to the easy solution and simply encouraged Ben Bernanke, chairman of the Federal Reserve, to print more and more money.

When this trick failed to deliver because the new bills weren’t covered and, therefore, the value of the dollar began to drop, it became necessary to invent some kind of alibi for the financial carelessness that led to this monstrous national debt. The abridged version of the alibi goes something like this: “The more money we borrow, the more we can cause to flow through the economic system, which will lead to growth in the economy and a decrease in debt in proportion to the size of the American economy.”

Capitalist Jungle

But this didn’t work. In 2012, the American economy grew 2.8 percent and added approximately $694 billion to the national treasury. The national debt, on the other hand, simultaneously grew at almost double that rate — $1.21 trillion. And the pit just keeps getting deeper, because there is a “bug” in this equation of the Democrats, who are pretending to resolve the debt by investing in the economy. This “bug” is that the United States is not actually investing in the economy, but rather in entitlements.

This is the place to say something about the coverage of the debt crisis in the Israeli media, most of which is left leaning, like the U.S. media. Due to a paradoxical combination of ignorance and arrogance, the United States is still portrayed among wide circles in our media as a capitalist jungle in which the weak are left to their moaning and the state shakes itself free of them. The truth … how to put this gently … is a little different.

An incredible portion of the national budget of the United States — about 45 percent — is allocated to paying entitlements to the poor. In addition, 19 percent goes to pensions and benefits for former state workers and retired soldiers. The remaining 30 percent goes to everything else — education, security, infrastructure, etc.

And no, we haven’t made a mathematical error and forgotten a small percentage. Last year, the remaining 6 percent, about $220 billion, simply went to paying interest on the national debt. A middle-class American family in which both adults work and together earn a total of $80,000 a year and that pays a federal income tax in the amount of 25 percent actually pays $1,200 a year in interest on the national debt without even being aware of it.

Considering the national debt’s current rate of growth, within 10 years the same family is likely to be paying $3,000 a year — not to begin paying back the debt, but just to maintain its interest. Without even noticing it, American parents will be funding the college education of some kid in China.

But these costs, as previously mentioned, are hidden from sight, while the entitlements, which have become a national calamity in the United States, are very tangible, and it’s easy to market them to voters by populist demagogy. An investigation conducted just two weeks ago by CBS’ “60 Minutes” exposed the fact that about 50 percent of the approximately 10 million Americans who receive entitlements from Social Security due to a claim that they are unable to work — disability — are lying. Millions of others fraudulently receive food stamps because the Obama administration has effectively cancelled all the fastidious verification procedures that were previously necessary to be awarded entitlements and, in so doing, has brought the amount of entitlement recipients to a historic high. About 50 percent of the approximately 320 million Americans receive one kind of entitlement or another, although only about 16 percent of them are classified as poor.

Unpaid Bills

When President Franklin Roosevelt established Social Security in 1935, 40 citizens were contributing money to the system for every one citizen receiving entitlements. The proportion today is less than one to three and, with giant steps, is approaching one to two. Under these conditions, the American welfare system is incapable of sustaining itself; and this is the central reason for the fatal addiction of the United States to loans.

In the last week, throughout the crisis surrounding the debt ceiling, the Democrats accused the Republicans of preventing America from “paying its debts” and claimed that the Republicans were liable to bring the country into insolvency. This is a cynical play on words that can gain acceleration only in an encouraging, superficial media environment.

The truth is that the United States hasn’t paid its debts even after raising the debt ceiling again; the nation essentially took out new loans in order to pay off the ones whose pay date had already arrived. In so doing, America only dug deeper the pit in which it has become ensnared.

But the truly absurd thing is that, because there are so few entities in the world capable of dealing with the size of loans the government is requesting — mostly the large banks, a few giant pension funds and the Chinese government — the United States actually is funding the payment of loans it can’t repay by taking new loans from exactly the same parties to which the nation already owes trillions.

This is what the Democrats are calling a responsible policy of repaying debts, whereas the Republican demand to regulate government expenditures in accordance with the quantity of revenue is labeled an “extremist stance.”

Maybe the Democrats should listen to some words of advice: “The president has taken out a credit card from the Bank of China in the name of our children, driving up the national debt so that we now have $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.”*

The speaker, by the way? Senator Barack Obama, 2008.

* Editor’s Note: The author has paraphrased this quote by Barack Obama.