'Red Ink Week': Stuart Varney and FBN Devote Five Days to the National Debt
Today's cuppa: Breakfast blend coffee
All this week, Fox Business Network (FBN) devotes much of its coverage to looking at how the government -- both on the federal and state levels -- is spending taxpayer money (which is the only money government has to spend).
Also examined are the repercussions of unchecked government spending and borrowing, with a particular emphasis on the debate over the national debt.
This is not a new issue. Back in 1996, "Schoolhouse Rock" took it on with "Tyrannosaurus Debt."
Of course, the debt discussed in the video seems like pennies compared to what we're facing now. Click here to watch the National Debt Clock in real time (including how much you, and I, owe).
One of the FBN journalists working on "Red Ink Week" is British-born Stuart Varney, a graduate of the London School of Economics, who used to work for both CNN and CNBC before coming to FBN.
He took the time to answer some email questions about the tough issues we are facing and what we can and should do about them:
Q: What are the biggest drivers of our debt?
A: The biggest debt drivers are Medicare and Social Security. Both have a dedicated tax revenue source, but outlays on these programs are so large, they "crowd out" other spending as a proportion of total spending. They push overall spending into deep deficit. And, outlays on both are rising rapidly. The 25% increase in spending in other non-defense areas under the Obama administration, has not helped.
Q: At what point will servicing the debt overtake our entire GDP (Gross Domestic Product)?
A: There is no specific date when debt service (interest payments) overtake GDP since that depends on future economic growth rates and interest rates. But it is generally assumed to be within two decades.
Q: What tax implications does the debt have for those who have just graduated from college?
A: Today's college graduates surely face an alarming tax outlook. They must pay for the Medicare and Social Security of a vast, currently retiring baby boom generation. Further: they must pay the interest on the vast debt that baby boomers have accumulated. Throw in the $1 trillion worth of student loan debt already on the books, and today's graduates have a daunting outlook!
Q: What are the national-security implications of the national debt?
A: The national debt of $14.3 trillion poses a significant security threat: if we rely on foreign lenders, they have leverage over our foreign policy. Plus, a nation that cannot pay its bills has difficulty imposing its will on the world: it loses clout.
A: What implications for those who will start high school or kindergarten this fall?
A: I have six grandchildren; they are all in my will. With this debt burden on their back, run up by my generation, I feel an obligation to help them from the grave, IF this administration will get its hands out of my estate.
Q: Is there anything that can be done in the short term that will significantly reduce the debt?
A: There is no short-term fix available for a "significant" reduction in our debt. If we refuse to raise the debt ceiling and try to "live within our means" immediately, we will default...that is wrong, irresponsible in the extreme and borders on national lunacy.
Q: In the long term?
A: In the long term we need to do several things: turn away from expensive, bureaucratic government programs as the automatic solution mechanism for social policy, reform entitlement programs with privatization, and expand the tax base, either by taxing the income of a broader spectrum of income, or a consumption tax.
Q: What should we stop doing right now?
A: Stop the
demagoguery. The Democrats recently put out an ad showing granny being thrown
off a cliff because of the Ryan Medicare proposal....that poisoned what should
be a rational debate. Reform now, or go bankrupt later. Voters need a
reasonable debate around that premise.
(Click here for a video in which Wisconsin GOP Rep. Paul Ryan explains his proposal. Google "Ryan Medicare Proposal" for a whole list of articles pro and con. Click here for the ad Varney referenced, which is from The Agenda Project, not the Democratic National Committee.)
Q: The House of Representatives already rejected a bid to raise our debt limit, but another vote will come up. What sort of cuts should be demanded to justify raising the limit again?
A: If we raise the debt ceiling by, say $2 trillion, we should agree to cut spending by $2 trillion. That is a credible borrowing and spending-cutting plan.
Q: Are you optimistic or pessimistic that we can reverse our current course?
A: Pessimistic. Bankruptcy/default is a very real possibility. I came to America because of its liberating, positive culture, so different from Europe. I am saddened by the turn America has taken under this President, but I remain hopeful that we can turn back from the brink, and become once again the dynamic, positive society that I have come to know and love.