Smarty Pants: the Federal Debt

Last week I wrote that I was about to embark on a quest to educate myself about the current economic situation so that I would be able to at least comprehend what a trillion dollar stimulus means, and what an educated response to the economy in general should be.  Now, admittedly that goal is ambitious--if world-class economists can't agree on the appropriate approach, what makes me think that I can hone in on an opinion?  Nevertheless, as promised, I started reading up.

Well, several days later I haven't gotten that far.  Not because I think it's boring (although I will confess that my latest knitting binge has kept me otherwise occupied), but because there is so much information to process--so much to learn--especially for an economic novice like myself.  

So I don't have much yet to share, except this--you might have noticed on the sidebar that I have added, just for today, the National Debt ticker on the above left.  My reading, as you might be able to tell, started with budget deficits and the federal debt, hence the rather alarming clock.

Here are some of my initial comments:

1.  I had a physical reaction when I visited the debt clock for the first time yesterday.  A sort of rising panic in my stomach.  Seeing all of those zeroes, and the millions adding up so quickly, made me want to check my own bank account!  Which leads me to say that..

2.  ...it is so easy to hear the words "billion" and "trillion" and relegate them to some abstract concept of monetary value.  But seeing the numbers scroll by like that made it seem a little more real to me.  Not completely real, but a little more real.

3.  The basic fundamental truth behind the federal debt is that the government is spending a lot more than it is drawing into it's General Fund (funded by our income and corporate tax dollars).  And these numbers don't even include the stimulus package currently being debated in Congress!

4.  The government borrows money from the Social Security and Medicare trust funds to help offset this debt, but that money only covers about half, which still leaves the country about $5 Trillion in the hole...

5.  ...and where does the rest come from to fill in the gap?  Foreign countries.  Like China, for instance, and the United Arab Emirates.  And they are charging interest.  Let's hope they don't come calling to collect anytime soon!

I read recently that people tend to dismiss things they don't understand.  Well, I certainly don't understand the complexities of our modern global economy.  But what I do understand is that spending more than you make year after year leads to one inevitable end: bankruptcy.  And I have no idea what bankruptcy would do to our nation, but I can't imagine that it would be pretty.  

I hope I haven't frightened you all into never returning.  I promise I'll take the clock down tonight (mainly because I can't stand watching it for too long).  But I also promise that I will keep routinely writing on this issue of the economy, because it is too important to ignore.  And I can't in good conscience write day in and out about the home economy and entrepreneurialism, or even spending money on swing-arm sconces, without paying mind to some of these bigger issues.  

note: Smarty Pants posts are my routine reflections on current events.  My hope is that we will all become smarty pants.

For Previous Smarty Pants posts on the economy, read below:

Econ 101

the Bailout

Election Exercise: Tabulating my Taxes

Meanwhile, in other News

note: smarty pants posts focus on current events, and not the celebrity kind.  Sadly, the events of late are...well, a bit sad.  So if you prefer "ignorance is bliss," read no further.

The end of a presidential election race is kind of like a tornado--it sucks up everything in it's path.  Meaning that it consumes the news, the commercials, and the internet.  Who can escape it?  

Meanwhile, the rest of the world keeps on turning.  So for a bit of perspective, here's what is happening outside of the election:

*  We aren't the only ones struggling with economic troubles.  Read about how interconnected our global economy really is through this account of monetary woes in Eastern Europe.  If you don't have the stomach for more economic articles, here's the skinny: Eastern European countries borrowed a lot of money to spruce up their nations in order to be accepted into the European Union.  Their bankers were Western European countries, which are currently under the same credit crunch we are experiencing.  And with currencies suddenly dropping like flies, everyone is feeling the squeeze, and the IMF (International Monetary Fund--aka Big Bank) is shelling out some bailout money of its own.

*  More talk and action on the "Green New Deal" concept.  If you follow environmental news, and wonder where the headlines have gone since the economy and elections have taken the spotlight, read this analysis published in Britian's Guardian for an update.

*  On a side note, I found that some of the Guardian's sidebar headlines read like a morbid menu: "Um, yes--I'll have the 'recession special' with the 'week of wrath' and a side of the 'banking crisis timeline.'  And for fun I think I'll order the 'credit crunch in cartoons' for dessert.  Thank you."

*  To remind us that the Middle East still has it's share of turbulence, read this article about a recent US strike in Syria.  Also, the Iraqi political leadership is sandwiched between the US and Iran as it tries to decide whether to allow US troops to stay in the country past the end of this year.  Can you guess Iran's opinion on the issue?  click here to read more.

*  And the US isn't the only one with an election looming.  Israel's Prime Minister Ehud Olmert, forced to leave his post due to accusations of corruption and scandal, will vacate the seat, with contenders Binyamin Netanyahu and Tzipi Livni dueling for the post.  Elections are likely to happen in early 2009.  read more here.

*  Back to the economy, it is important to remember that currency and credit crunches here equals food crises in the Southern Hemisphere.  Read this article to learn more about the growing global food crisis.  (I know--yet another crisis.  We're apparently crazy for crises these days...)

Okay...so I didn't mean to make you depressed by the headlines.  But the truth is that there really is a lot more going on in the world than Obama vs. McCain.  And if we don't know what is going on, how will we know how to respond?  

Did you miss my Election Exercises, designed to help me prepare for the coming vote?  Click here to catch up!

Election Exercise #5: Avoiding End-of-the-Stretch Election Traps

note: smarty pants posts are my routine thoughts on current events.  And even though we're all getting terribly tired of it, the elections are indeed current...

Well, I've studied my issues.  I've gotten to know my candidates (the local ones).  I've figured out where I need to vote.  And I've even tabulated my taxes.  Just one last thing before I hit the poles:  I have to dodge the cleverly laid, end-of-the-stretch, election traps.

These traps are designed to distract me, to tickle my fancy, and elicit an emotional (as opposed to rational) response.  They are as follows:

1.  Apocalyptic claims.  You've heard them before.  They are the ones that promise the END of the WORLD at the advent of so-and-so being elected. or this bill being passed, or that judge being confirmed.  Yes, I understand that people are passionate about candidates and causes, but do we really think that the immediate outcomes of this election cycle will dramatically result in civilization as we know it crashing to an end?  Given the testimony of history, I'd say it's highly unlikely.  And I'm skeptical of anyone who suggests otherwise.

2.  Hyper-partisanship.  As if we don't have enough partisanship during the year, it seems intensified during this final stretch.  Now, a dose of partisanship is good for any country--keeps democracy on its toes.  But when members of either party start publicly suggesting that all the troubles that ail us are strictly to blame on the "other guys," I start to tune out.  In government, like everything else, it takes two (or more!) to tango.

3.  Oversimplification.  In our age of 30 second sound bites, it is efficient and practical to squeeze highly complicated issues (like the demise of our economic system) into neat, finger-pointing, stump-ready packages.  Oh lament the listener who believes it is that simple!  Contrary to what we may be led to believe, politics, regardless of who's driving, never have the luxury of operating in a vacuum.  Rather, they are thrown into the jumble with everything else (like business, education, religion, and culture), and thereby Way exceed the sound bite time limit.

I, for one, will resist these attempts to persuade my voting decision, and will instead make a choice based on the information I learned from my other election exercises!  Trap endured (only 2 more weeks) and avoided!

Did I miss any traps?  Let me know what you think by emailing me at shillberry@comcast.net or commenting here.

To catch up on previous election exercises, read below:

Tabulating my Taxes

Reading my Ballot Book

Getting Ready to Vote

Smarty Pants

Smarty Pants posts are my regular musings on current events.

Become a Smarty Pants yourself by reading the links below:

Smarty Pants on stephanieHillberry.com

Introduction to Smarty Pants

Election 2009: 

intro to Exercises

Exercise #1: Reading my Ballot Book

Exercise #2: Planning Ahead to Cast My Vote

Exercise #3: Tabulating my Taxes

Exercise #4: Knowing my Candidates

Exercise #5: Avoiding End-of-the-Stretch Election Traps

Election Musings: the Small Things

On the Economy:

The Bailout

In a Time of Economic Proposals, Here's Mine...

Econ 101

The Federal Debt

International Affairs:

The Middle East: steps to forming an opinion

General Thoughts and Comments on the Headlines:

Meanwhile in Other News

We Interrupt these Messages (thoughts on NPR)

Dirt, Money and the Globe

Striking my Fancy

Deep Economy--I promise it's cool

I just finished reading Deep Economy by Bill McKibben, and I have to say I liked it.  Now, I know what you're thinking--What kind of girl reads books called Deep Economy?  She can't be cool.  Let me assure you that I read a variety of other things too, in addition to books on the economy, like girly magazines, and even the occasional People and US Weekly.  And believe it or not, I think you might like McKibben's book, too.

His entire premise is to challenge the notion that "more is better" and recommend generally that we all be a little more neighborly.  If you aren't convinced yet that this is interesting stuff, consider that I had a lively discussion with friends just the other night on this very topic, and they certainly are cool.  

I think that young people, maybe women in particular, are searching for some alternatives to the usual arguments and agendas.  I mean, I follow politics (more than I'd like--I'm married to a political junkie), and I have to confess that I get rather tired of hearing the same stump speeches time and time again.  I don't really feel like I fit well into "conservative" and "liberal" categories.  This, incidentally, is one of McKibben's points--that a lot of stuff worth talking about doesn't "fit."

Anyway, I picked up the book originally because the Etsy book club will be discussing it this spring.  Good recommendation from a great company.  Check it out, and visit etsy to jump into the discussion.  Or email me your thoughts--I'd love to hear 'em!