National debt

I am a 26 year old Highland Park Illinois resident who is concerned about this country's future.

We are allowing ourselves to let partisan differences tear away what truly unites us all together, a hope that our children will have it better then we do now. In that we need to look at our financial obligations both on a personal level and as a nation. Deficit spending is not sustainable, if you doubt this try continuously running up your credit card bills.

Eventually a time comes when the tab must be settled. By continuing in our current fashion we simply delay this time to future generations. The idea that trillions of dollars can be spent that we simply don't have is not possible.

Keynesian economics, the idea behind economic stimulus packages, has a place and a time. Unfortunately that time is now, but it is not an ongoing practice. I am not against actions designed to spur the economy into growth. What I am against are programs that continuously drain money from the public's coffers in exchange for minimal or negative results.

At the bottom of every economic plan must be consideration for how can this be paid for. The mindset behind a stimulus is that the eventual growth will cause an increase in the size of the economy and therein tax collections that will offset the cost associated with it. If this is impossible then the plan by definition fails.

I liken the idea to Adjustable Rate Mortgages, there is nothing dirty or wrong with ARM's. Simply that people must consider what the long term costs are of over extending themselves. If you know that in 5 years your income will be able to sustain the house you are stretching to buy now then it makes sense. If your thought is that simply by buying more now you will reap greater benefits when a house increases in value later then it is a bad decision. Too many outside variables affect this outcome, there is nothing you can do to change the eventuality and you might as well gamble your money.

I've been questioned by friends how this is different then investing in a stock market portfolio. There your capital is combined with countless others to provide companies with the means necessary for future products or offerings. By buying stock in a new company you allow its officers to expand a production line or commit to research and development with tangible results. If you choose wisely and do your homework on the management team and their vision then you are investing for the right reasons.

The same approaches should be put in Federal Deficit Spending. By now you should be asking yourselves "what is the solution? How can we turn the tide in the growing debt?" The answer is a difficult one but the beginning must be made by reviewing programs that under perform and perhaps changing the way they are administered. More to come on these ideas in a later post.