Sustainability is a word you hear a lot these days, and it is usually in the context of the environment. But we have another sustainability problem that needs immediate attention: our interminable federal deficits and the gargantuan debt they create. If it has been a while since you took economics, the deficit is the difference between how much money the federal government brings in and how much it spends. The debt, on the other hand, is all the money the federal government has borrowed because it spends more than it takes in. We have major sustainability problems with both.
The deficit for this past fiscal year was $870 million. Within the next two years, the deficit will close in on $1 trillion. The total federal debt currently stands at $21 trillion (give or take a few hundred billion), which works out to about $65,000 for every single person in America. Bottom line: the federal government is spending vastly more than it brings in with no plans to change fiscal course anytime soon. That is entirely unsustainable. It is common sense that you cannot permanently spend more than you bring in and stay afloat. We taxpayers certainly cannot run our businesses or households that way. Only the federal government gets away with that kind of long-term fiscal mismanagement. The rest of us have to try and live within our means — or go bankrupt.
There is no quick fix for our out-of-control spending, but, as with all addictions, the first step is admitting we have a problem. Most of us have limited experience with things measured in billions or trillions. Those numbers are so big it is easy to dismiss them as theoretical. But we need to fight that temptation. Those figures are very real and very dangerous for our national well-being. Now is the time to be honest about our debt crisis and confront it head on with deep structural changes.
Compared to the federal government, North Carolina has good fiscal health and we owe it to sound management and laws that protect the public purse. Our state treasurer, Dale Folwell, said recently that “unlike the federal government, we do not have an unlimited credit card.” Thank goodness. We have no deficit spending thanks to a balanced budget amendment that has been a part of the N.C. constitution since 1977. The state constitution, with some exceptions, prohibits going into debt unless the debt is approved by voters in a statewide bond referendum. Over the past decade, our legislature has also worked hard to control state government spending by limiting it roughly to the growth in the state’s population plus the rate of inflation. Showing discipline and foresight, the legislature built up our rainy-day fund to a record $2 billion, which will come in handy when the economy eventually slows down and state revenues drop. Unfortunately, none of these safeguards exist at the federal level. Washington could certainly learn something from North Carolina.
Sustainability is a buzzword, but the buzz has not reached the people who manage our country’s finances. As a nation, we cannot continue down the fiscal road we are on. The United States faces a lot of challenges both at home and abroad, but the debt crisis cannot take a backseat any longer. Fixing this problem has to be a priority. Taxpayers need to demand action now — for our own sake and the sake of whatever unlucky future generation is left holding the bag when the debt bubble finally bursts.
Luke J. Farley is an attorney in Raleigh.