Grim News

For those of you with a somewhat antiquated financial philosophy like “Don’t borrow more than you can afford to pay back”, you might be a little concerned about adding 700,000,000,000 dollars to our national debt.  Let me assure you, there is nothing to worry about.

US National Debt Clock

After all, it is only around 7% of what we currently owe.  What is of slightly more concern is the fact that we are about to run out of digits on the aforementioned debt clock.  Maybe that means it will reset to zero and we won’t have to pay it back!  To give you an idea how what it is going to take to repay 9 trillion dollars, consider the following:

(Numbers based on estimates shown in this 2007′s tax receipts memo)

If we spent EVERY SINGLE DOLLAR of tax revenue to pay down the debt, it would still take between 3 and 4 years to pay down the debt.  That is 3-4 years of zero military spending, zero Social Security, zero courts, zero government activity of any kind.

Yes, I’m using Wikipedia as a source for this one.  When you start paying me to research like a real journalist, I’ll start working like one.  The average family annual income is around 50,000 dollars.  Looking at the debt clock above, we could work for over 18 months while giving every dime we make to the Federal Government and still not have the debt paid off.

Instead of being one of the many voices decrying the government’s intentions to bail out Wall St. fatcats with MY taxpayer dollars, let me offer a slightly cheaper solution to the problem.  One that won’t require us to buy a new sign with more digits on it.

Dave Ramsey (Oh gawd! a talk show host?!?!)  has a good idea which he calls Three Steps to Change the Nation’s Future.  I’ll pass on the “Pray for our leaders” bit.  The kind of God that I would worship would expect us to solve our own problems, especially when they’re our fault in the first place.  However, the Common Sense Fix is good stuff.

• Insure Sub-prime mortgages with FHA-style insurance.
• Rewrite all delinquent mortgages insured in this manner to a fixed 6%, 30-year mortgage.
• Bring homeowners with said mortgages current and remove all penalties and late-fees accrued.
• Cancel all prepayment penalties to encourage payoff of these mortgages
• Eliminate all “Golden Parachutes” for investment companies that hold these government backed mortgages.
• Change to “Mark to Market” accounting rules
• Eliminate Capital Gains Taxes to flood the market with investment dollars.

There are additional details in his document. Yes, the rich can get richer from this plan but at least we’ll be using their money to fuel the recovery instead of a blank check given to a Treasury Secretary who is a walking-talking example of Crony-Capitalism run amok.  Ramsey estimates the cost of this plan at around 50 billion dollars.  That is a lot more palatable to Main Street than 700 billion.