— by Inya Ivkovic, MA
Honestly, nothing could have prepared me for what the White House forecasted on Tuesday concerning the federal deficit. I congratulate them on their honesty, but if there ever was a time I would have preferred being lied to, it was on Tuesday, when the budget deficit forecast for the next decade was announced.
The final tally was a 10-year cumulative deficit of $9.0 trillion. And some tally that was! Even if we were to sum up all previous deficits since the Boston Tea Party, it still wouldn’t top the current $9.0-trillion figure over a 10-year period. Or, for those who like to think in proportions, for the next decade, America’s debt will represent three-quarters of its total economy. Adding insult to injury, before anything can be done about it, the U.S. still has to survive the recession and unemployment aftershocks in the vicinity of 10%.
What else are President Obama’s number-crunchers saying? Not as if they haven’t said enough, but the new estimate is for a U.S. 2009 GDP contraction from 2.5% to 2.8%, even as the economy is crawling its way up out of the deepest slump in decades. This latest estimate on economic growth is also the grimmest so far this year. Considering we are four months from the year-end, this estimate unfortunately has the most chance of coming to fruition.
To say that the challenges ahead of Obama are huge would be the understatement of the year. The economy is still far too vulnerable to afford traditional deficit-reducing methods, such as spending cuts and tax increases. Then there are at this point some “psychotic” U.S. debt holders, particularly foreign bondholders, who could — maybe and only maybe — be convinced to hold on just a bit longer if interest rates are increased. But increasing interest rates might once and for all silence the famed American consumer.
How did Wall Street react? Well, you’d think those rascals would all up in arms about the prospect of the leanest decade in history, but they got their pacifier in the form of President Obama’s decision to nominate Republican Ben Bernanke for a second term as the Fed’s chairman. I suppose that, for a moment’s peace to digest the news, it is a small price to pay. But I shudder thinking what will happen once the Titanic and that iceberg of federal deficit make contact.
Joking aside, of course I don’t really like to be lied to, so I have to say “kudos” one more time to Obama for having the guts to be honest with America and tell it like it is. It couldn’t have come at a worse time for him, yet he didn’t falter. The man promised he would cut the deficit in half by 2013. I suppose that’s not going to happen. Had the economy held as forecasters expected it to at the end of 2008 and early this year, this goal would have been easily achieved. Alas! And Obama’s swan song was supposed be his healthcare bill. I have a feeling that’s not going to happen either. Adding another trillion dollars to the proverbial iceberg of a deficit is not likely to fly with lawmakers, with the public or with Obama himself.
Having said all that, I refuse to join the Republicans’ pouncing. That’s just demoralizing and the last thing we can afford at the moment. Yes, we know that borrowing, spending and debt are out of control. And, yes, you don’t have to have a degree in math to realize that a deficit of $9.0 trillion in aggregate over the next decade is essentially unsustainable. But that’s just describing the water to a drowning nation.
I’m short on ideas on where the exit is, although, like many others, I know which doors lead nowhere. The only idea I have is for ordinary people, which may not even be an idea, but merely common sense. That idea is to dig down, work harder than ever, save more than ever, eliminate debt aggressively and ruthlessly, and, most importantly, unlearn the behavior of senseless consumerism. Republicans, Democrats, Independents or “Uninteresteds,” we have all been enslaved by a mountain of debt of our own creation. If we want to be free again, the decade ahead will have to be the decade of the fiscally responsible, humble and frugal Americans.