Romney needs to articulate his plans for dealing with interest on our debt
By J. J. Jackson
So, here we are. It is four years after "Hope and Change". That slogan proved to only be more psychobabble from a babbling fool who rode the saying right into the White House.
And here we are with Romney, as bad as he is, but still much better than Obama, struggling to overtake the Messiah in the polls. Yes, I know most of those polls are oversampling Democrats by seven to ten percent.
The economy is struggling. As a result, interest rates have been kept artificially low to prevent the United States' debt situation from blowing up. This has been done for one reason and one reason only: to keep President Obama from looking like the complete nincompoop that he is. And that's it isn't it? That's the big, old elephant in the room that no one wants to talk about: what happens when things turn around and we no longer have cheap money?
Right now, thanks to cheap money and low interest rates, payments on the debt of the United States for FY2011 were $454.4 billion. The gross federal debt at the time was $14.8 trillion. That's a rate of just 3%.
In 2008 we paid $451 billion on $10 trillion in debt for a rate of 4.5%.
In 2003 we paid $318 billion on $6.7 trillion in debt for a rate of 4.7%.
In 1994 we paid $296 billion on $4.7 trillion in debt for a rate of 6.3%.
So, we see that in better times, people demand more return on their investment. We, as a nation, have to pay a higher rate to get people to buy our debt in the good times. What's worse is that as buying our debt becomes riskier, people get uppity and demand more return for greater risk. We are over 100% debt to GDP ratio right now. Want to know how hard it is to get people to keep buying debt with that sort of a relationship? Just ask Greece, Spain, Portugal, and Italy.
Something that I have not heard Mitt Romney utter a single word about is what he is going to do, not if, but when we are required to start paying people more to take on our debt. I know he talks about cutting federal spending. But the fact is that if he cuts $1 trillion from our yearly spending, that only prevents us from adding to the debt we already owe. In order to reduce the debt, deeper cuts are in order. And no plan I have seen out of the Romney/Ryan camp comes even close to cutting $1 trillion for a fiscal year.
Realizing that Mitt is going to continue deficit spending for the foreseeable future, our debt load is going to increase. When the economy heats up, investors will demand more and the interest rate on our debt jumps. Where's that extra money going to come from?
Paying interest on trillions of dollars is a lot of money. I know Mitt knows it. I know Obama doesn't have a clue about such things. So what's the plan? Where do we get the dollars? Obama's philosophy is to abuse our children, print more money, and tell them to work harder for less.
Any plans Mitt? Want to share them with us?
Look, I know it is scary to talk about this stuff. But it needs to be talked about. When America starts to recover, we are going to have to deal with real world economics once again.
And Mitt, if you want to be taken seriously as the adult in the room, God knows Obama can't be, then you need to spell it out. Tell us how you are going to deal with the interest on our debt ballooning once you and a Republican Congress start peel back the layers of liberalism that are strangling America, but not cutting to the point where we are no longer spending like drunken sailors. We all know you aren't willing to go all the way and do what really needs done.
I know the standard line Mitt likes to throw out there. He talks about how we can "grow" our way out of our debt problem. But the kind of debt we are dealing with requires more than "growth". It requires sacred cows to be carved up and sacrificed for the good of this Republic. Because not only is continuing to spend more than we have a problem, figuring out how to pay back the interest on that money is going to be one Hell of a feat in itself.
J. Jackson is a libertarian conservative author from Pittsburgh, PA who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the Pittsburgh Conservative Examiner for Examiner.com. He is also the owner of The Right Things - Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at http://www.libertyreborn.com.