Today’s cuppa: Breakfast blend coffee
All this week, Fox Business Network (FBN) devotes much of its coverage to looking at how the government — both on the federal and state levels — is spending taxpayer money (which is the only money government has to spend).
Also examined are the repercussions of unchecked government spending and borrowing, with a particular emphasis on the debate over the national debt.
This is not a new issue. Back in 1996, “Schoolhouse Rock” took it on with “Tyrannosaurus Debt.”
Of course, the debt discussed in the video seems like pennies compared to what we’re facing now. Click here to watch the National Debt Clock in real time (including how much you, and I, owe).
One of the FBN journalists working on “Red Ink Week” is British-born Stuart Varney, a graduate of the London School of Economics, who used to work for both CNN and CNBC before coming to FBN.
He took the time to answer some email questions about the tough issues we are facing and what we can and should do about them:
Q: What are the
biggest drivers of our debt?
A: The biggest debt
drivers are Medicare and Social Security. Both have a dedicated tax revenue
source, but outlays on these programs are so large, they “crowd out” other
spending as a proportion of total spending. They push overall spending into
deep deficit. And, outlays on both are rising rapidly. The 25% increase in
spending in other non-defense areas under the Obama administration, has not
Q: At what point will
servicing the debt overtake our entire GDP (Gross Domestic Product)?
A: There is no
specific date when debt service (interest payments) overtake GDP since that
depends on future economic growth rates and interest rates. But it is generally
assumed to be within two decades.
Q: What tax
implications does the debt have for those who have just graduated from college?
A: Today’s college
graduates surely face an alarming tax outlook. They must pay for the Medicare
and Social Security of a vast, currently retiring baby boom generation. Further:
they must pay the interest on the vast debt that baby boomers have accumulated.
Throw in the $1 trillion worth of student loan debt already on the books, and
today’s graduates have a daunting outlook!
Q: What are the national-security implications of
the national debt?
A: The national debt of $14.3 trillion poses a
significant security threat: if we rely on foreign lenders, they have leverage
over our foreign policy. Plus, a nation that cannot pay its bills has
difficulty imposing its will on the world: it loses clout.
A: What implications
for those who will start high school or kindergarten this fall?
A: I have six grandchildren; they are all in
my will. With this debt burden on their back, run up by my generation, I feel
an obligation to help them from the grave, IF this administration will get its
hands out of my estate.
Q: Is there anything
that can be done in the short term that will significantly reduce the debt?
A: There is no short-term fix available for a
“significant” reduction in our debt. If we refuse to raise the debt
ceiling and try to “live within our means” immediately, we will default…that is wrong, irresponsible in the extreme and borders on national
Q: In the long term?
A: In the long term
we need to do several things: turn away from expensive, bureaucratic government
programs as the automatic solution mechanism for social policy, reform
entitlement programs with privatization, and expand the tax base, either by
taxing the income of a broader spectrum of income, or a consumption tax.
Q: What should we
stop doing right now?
A: Stop the
demagoguery. The Democrats recently put out an ad showing granny being thrown
off a cliff because of the Ryan Medicare proposal….that poisoned what should
be a rational debate. Reform now, or go bankrupt later. Voters need a
reasonable debate around that premise.
(Click here for a video in which Wisconsin GOP Rep. Paul Ryan explains his proposal. Google “Ryan Medicare Proposal” for a whole list of articles pro and con. Click here for the ad Varney referenced, which is from The Agenda Project, not the Democratic National Committee.)
Q: The House of
Representatives already rejected a bid to raise our debt limit, but another
vote will come up. What sort of cuts should be demanded to justify raising the
A: If we raise the
debt ceiling by, say $2 trillion, we should agree to cut spending by $2
trillion. That is a credible borrowing and spending-cutting plan.
Q: Are you optimistic
or pessimistic that we can reverse our current course?
Bankruptcy/default is a very real possibility. I came to America because of its
liberating, positive culture, so different from Europe. I am saddened by the
turn America has taken under this President, but I remain hopeful that we can
turn back from the brink, and become once again the dynamic, positive society
that I have come to know and love.