D. Dowd Muska


‘The Nation’ Isn’t Broke -- Washington Is

August 11, 2011

It’s time to clarify some language.

Searching “the nation is broke” on Google yields over 55,000 results. “National bankruptcy” is more popular -- 628,000 results. Granted, at times the terms were applied to other countries, but a sizable number of the links describe the Land of the Free’s horrid financial condition.

Contrary to the fashionable phrasing, “the nation” is neither broke nor bankrupt. The federal government is not the nation.

Washington’s addiction to debt isn’t in question. Fedpols have produced three straight budget deficits that each exceeded $1 trillion. (“Before 2009,” reports the Associated Press, “the deficit had never come close to $1 trillion in a single year.”) The national debt -- loans held by U.S.-based individuals and institutions, the Social Security “trust fund,” and foreigners -- has blown past $14 trillion. And while the figure jumps around, depending on which entity is doing the unfathomable extrapolations, the present value of entitlement programs’ unfunded liability is between $60 trillion and $110 trillion.

True, Uncle Sam is not assetless. Balanced against the abyss of red ink is a whole bunch of property. Hundreds of millions of acres are controlled by agencies such as the Forest Service and Bureau of Land Management. And as The New York Times noted earlier this year, “The [federal] government owns or manages more than 900,000 buildings or other structures across the country -- office buildings, courthouses, warehouses and other property types -- making it the nation’s largest landlord.”

Throw in investments and military equipment, and the feds claim that their assets total $3.7 trillion. So if every National Park, barren acre in the middle of nowhere, courthouse, laboratory, and nuclear-tipped ICBM were posted on eBay, the proceeds wouldn’t begin to cover the debt.

But wait -- PBS personalities, left-wing editorial boards, and social-science academics constantly hector their countrymen about the scourges of “shopaholism,” “affluenza” and “McMansions.” Aren’t Americans as profligate as their national government?

No, we’re not.

America’s private wealth has taken a beating during the Great Recession and Phantom Recovery -- it’s down several trillion dollars from 2007. But the net worth of households and nonprofit organizations remains well in the black. It was an impressive $58.1 trillion in the first quarter of 2011, according to the Federal Reserve’s latest “Flow of Funds” report. Oprah, Bill Gates, Steven Spielberg, Warren Buffett, and their tax-bracket neighbors are awfully rich, but the nation’s treasure is distributed far more evenly than is commonly understood. In 2007, the Federal Reserve’s Survey of Consumer Finances found, median (half have more, half have less) family net worth was $120,300. For households headed by someone nearing retirement -- i.e., between the ages of 55 and 64 -- the figure was $253,700. For families with a college-degreed head of household, median net worth was $280,800.

The legacy media revel in horror stories of individuals and families with tens or hundreds of thousands of dollars in credit-card debt. Data debunks sob sisters’ narrative of plastic perdition. The Fed found that four years ago, 46 percent of American households carried a credit-card balance from month to month. Ergo, 54 percent either didn’t have credit cards, or consistently paid their bills in full. (For balance-carriers, the median debt was $3,000.) And there’s abundant indicators that in the ensuing years, Americans have reacted to tough economic times not by taking on more debt, but by paying off creditors of all types.

How can a citizenry that, broadly speaking, manages its money responsibly be “represented” by men and women who, evidently, have no problem with an insolvent national government? Good question.

Democracy-worshippers’ chestnuts notwithstanding, most people opt out of the political/policy process. They’re too busy making a living, raising kids, and grabbing a little well-earned leisure time. Barack Obama, for example, received 69.5 million votes in 2008’s “historic” presidential election. But there were over 229 million Americans old enough to vote that year. Thus, a mediocre 30.2 percent of adults put the 44th president in office. (As lousy as Obama’s share was, it beat the comparable figure attained by George W. Bush in 2004: 28.3 percent.) Even folks who do pay attention and participate believe that D.C. is clueless. Earlier this month, a Rasmussen poll found that “just 17 percent of Likely U.S. Voters think the federal government today has the consent of the governed.”

There’s no getting past a brutal truth: Taxpayers are on the hook for the tab their “leaders” have run. But let’s not pretend that Washington’s drunken-sailor conduct is a reflection of Americans’ financial recklessness.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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