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.
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.
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
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
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.
# # # # #