U.S. government incredibly solvent

Published 8:00 pm Sunday, May 5, 2013

Dear Editor:

Reflecting a great myth that our politicians have perpetuated about our nation and its federal government, a Daily Leader reader declared in a recent letter to the editor that “when you spend more than you earn, you are headed for disaster.”

Even if you ignore the unique ability of the federal government to always pay its debts by printing new money – the big error in comparing the government’s economics to a family’s – the U.S. is fine in so far as total debt goes and could, in fact, easily increase it without harming our ability to pay it off. The simple truth is our assets are much greater than our liabilities as a nation.

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The U.S. government is incredibly solvent. Consumer and corporate defaults are also under control. Our total assets are 1,300 percent of our Gross Domestic Product (GDP) our country’s earnings, if you will. Our net worth is 550 percent of GDP – near the top of a 60-year range.

Debt is an important financial tool in investing in the nation’s infrastructure – the physical and virtual assets, systems, and networks required to sustain our security against enemies, economic vitality, and national public health and safety.

Certainly one person’s investment may well be another’s example of reckless spending, but our political process places us on the precipice of disaster when debt is off the table and spending cuts imperil national defense, education, health care and the general welfare.

Today the so called “debt crisis” has become a distraction from the real issues our country faces – namely, creating wealth and jobs by encouraging our banking and financial system to quit gambling with other people’s money rather than investing in viable new enterprises, changing the tax code to make it both more equitable and an incentive to invest, implementing trade policies that keep American employers at home.

Our political process fails to engage in meaningful discussions around these issues because special interests would prefer to obfuscate real problems with talk about national debt and continue to extract wealth from others to line their pockets rather than a build a productive economy with employment opportunities for anyone who wants to work.

Bob Arnold