For generations on both my parents’ sides there is this ingrained hatred of borrowing and owing money. Some of my family even call borrowing the “B word.”
Being “debt free” means working hard towards actually owning your own home or your own car, instead of the bank. It means paying off the entire balance of every credit card each month. It means putting your money to work for you instead of having your money sucked away by others.
Members of my family are indoctrinated from our earliest days to believe that to borrow is to surrender good judgement for an unworthy impulse.
This fiscally conservative formula has allowed most of us to prosper, accumulate and pass down wealth to each succeeding generation, and to use our capital thoughtfully instead of paying interest that supports lenders, bankers, and corporate honchos.
Of course, I have had a few cousins that maxed out their credit cards, extended their credit limits beyond their means, and hoped for a family bailout. Those bailouts never materialized. With tough love and no family rescue, usually in time they got the message and remedied their plights by paying off their debts, which by the way starts with not incurring new ones.
If you are familiar with the history of our national debt, you would realize that most of Congress are not members of my family.
A decade of bogus Republican rhetoric and fake Conservative outrage are revealed as yet again there is no dent in the national deficit. Congress last two weeks ago passed yet another “emergency measure” to extend the debt limit as they always do. On or before 19 January they will permit more borrowing yet again.
Keeping the government running is a good thing. But continually extending the national debt, in other words authorizing more borrowing without implementing a remedy or fix, is a bad thing.
The aura of the success of the Obama recovery is still glowing around the U.S. economy. While unfortunate circumstances necessitated borrowing heavily to cure the Great Recession and prevent complete economic collapse, the pace of new national indebtedness has substantially slowed over the last several years.
What President Obama, Fed Chairman Ben Bernanke, and Bernanke’s successor Janet Yellen did with interest lowering rates was genius.
By gradually dropping the Fed interest rates, home buying and long-term consumer borrowing became easier, bolstering property values and pushing cash out of saving accounts and into the stock market and into business investments. At the same time, the national debt, which increases to a great extent due to paying interest, slowed because lower interest rates also meant that national debt interest rates dropped as well.
Right now, national debt interest rates are somewhere between 1.2-3.6%. If we closed corporate loopholes to increase tax revenues, we could effectively pay all the interest and some principal at a pretty steady rate.
But rather than start paying off the $20.4 trillion debt with our booming economy, the Trump Congress cut corporate contributions and created mechanisms to especially favor the rich. Now is the time to start paying this off. Instead Trump wants us to borrow $1.5 trillion over the next several years to pay for his tax overhaul.
Stupid, stupid, stupid.
Remember when then Governor Schwarzenegger gave every car owner in California a partial refund of our annual car registration fee? Remember how happy you were when you got your refund check in the mail? Remember that about a year later California was broke and out of money? Those checks would have saved California billions in interest and softened the pain of the Great Recession. Your personal happiness soon turned to collective suffering.
The Republicans just sent a missile straight up into space and many are celebrating. Know that missile is headed back to earth in a few years and when it lands it will hit big with increasing interest rates, inflation, and more borrowing.
We have hit the tipping point where a robust and fully recovered economy is ready to cut into the now $63,185 that every American owes. Instead, what we perceive as tax savings, is in fact is provoking another economic crisis.
The Trump ploy of running up expenses until going bankrupt is where we are headed. And it appears once again Trump will escape debt-free while the rest of us are stuck with the bill.
Jonathan Kraut directs private investigations and private security firms, is a published author, Democratic Party activist, and SCV Interfaith Council member. His column reflects his own views and not necessarily those of The Signal or of other organizations.