[1]“The rich rules over the poor, And the borrower is the slave of the lender.” (Proverbs 22:7)
WASHINGTON (BP)–In the Old Testament book of Proverbs, King Solomon details the differences in thought, word and deed between a wise man and a fool. In addressing the foolishness associated with borrowing money, he makes clear the relationship between debt and servitude: No man can truly be free when he is bound by financial indebtedness to another. It’s clear, however, that the danger of debt is something a majority of the American people — including members of Congress and our president — have yet to take seriously. Even though our national debt is spiraling out of control, we appear unwilling to change our spendthrift ways.
In December Congress took action to increase our national debt limit by $290 billion — bringing our debt ceiling to a whopping $12.4 trillion. This, after two years of unprecedented spending during which time we accrued the same amount of debt that we accumulated in the first 200 years of our nation’s history. No matter how much money Uncle Sam extracts for his coffers, however, it appears it’s never enough. The demand for entitlements continues to grow and liberals in government are only too willing to accommodate that demand by expanding the power of the nanny state.
Contemporary society has been taught that when it comes to the world of finance, credit is king. Credit, we are told, is how we finance the good life. When Gordon Gekko told us that greed was good, we apparently believed him, and set about to prove his point. But, as the old saying goes, there’s no such thing as a free lunch. The United States cannot continue on this path of fiscal gluttony indefinitely. With every dollar we borrow, we sacrifice more and more of our freedom.
As individuals, we’ve come to rely increasingly on those credit cards in our wallets, charging 40 cents out of every dollar we spend. We finance everything: our homes, our vehicles, our educations, our entertainment — even basic essentials like food and clothing are more often than not purchased on credit in today’s marketplace.
As a nation, we’ve racked up nearly $12 trillion in debt and have seen the budget deficit soar from $455 billion to $1.4 trillion in the last year alone. And in the same way a strapped homeowner takes out a second mortgage on his house to stave off financial ruin for one more year, Congress has time and again — in the name of the people’s “general welfare” no less — voted to take on more and more debt to fund a ballooning list of appropriations and entitlements.
[2]In the face of this grim economic picture, only one of Solomon’s fools could say with a straight face that the American government and her people are economically free. To keep up with our consumption habits, we have surrendered the freedom that comes with true ownership and we live in service to our lenders. Because we have lost the discipline and maturity to distinguish our needs from our wants, we find ourselves surrounded by material goods bought on credit. But, one too many missed payments and that luxury vehicle in the driveway will be repossessed, and that McMansion in the suburbs will fall into foreclosure.
The risks associated with excess borrowing are no different at the federal level. As it now stands, 35 percent of the United States’ gross domestic product is comprised of foreign debt. Each year, we are financing a larger and larger chunk of the nation’s day-to day-operations on borrowed money, and each year the cost of servicing this debt goes up. This debt burden not only impacts our fiscal strength, it also significantly compromises our political and diplomatic position on the world stage. When the U.S. Government is beholden to foreign nations because of its debt, it is not free to act in the best interests of the American people, particularly when those interests conflict with the interests of our lenders.
Up to this point, America’s approach to dealing with the pressures of our debt has been to take on still more debt and leave the headache to future generations. This folly must end. If we truly value our freedom we must overcome our addiction to debt and learn how to live within our means.
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Ken Connor is chairman of the Center for a Just Society based in Washington D.C., online at www.centerforajustsociety.org.