The Debt & Deficit
Pundits try to justify the size of the debt by comparing it to the GDP, even though it amounts to trillions of dollars that we owe to China, Japan, the oil-exporting nations, Brazil, Russia, etc. (Figure 5.2).169 The logic is that if the economy grows, then the higher amount of debt as a fraction of a larger GDP will still be small. Therefore, it is okay to keep on borrowing more. However, the fact remains that a dollar of debt is still a dollar that we owe somebody and need to repay sooner or later, with interest. Moreover, interest payments on that debt do not produce anything for the society. According to the 2013 Long Term Budget Outlook by the CBO, “the federal debt held by the public would reach 100% of GDP in 2038 if current laws remain in place. Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.”170
Thus began the institutionalization of unlimited borrowing, in which Congress keeps extending the debt ceiling and continues to mortgage our children’s future, as if it had an ATM card with an unlimited money supply. What is missing from our public discourse is the all-important question: Who is going to pay the bill?