Debt and Taxes

Okay, time for another political rant.

Say you’re a parent, and you’re low on money, but your kids want cell phones. No problem, you say, you’ll just borrow some money. So you take out a loan and get them cell phone plans. You take some of the kids’ money to help pay for the plan, but you also have to pay back the loan. They kids are happy, but soon they tell you they need text messaging added to their plan. It seems like a good idea, since not getting it could cause them to rack up insane bills, so you take out another loan and buy a text plan. You take more of their money but also have to pay off the loan. Now they need data plans, so they can browse the web and use GPS and stuff. Again you take out a loan. Again, they’re happy with what they have, but at this point you have some tough decisions to make. You don’t have the money to pay off all these loans, and the charges never end because the kids will always expect their phone and data plans. So you can keep taking out loans until your credit is so bad no one will give you money, at which point you lose everything, including the phones. Or you can take away the phones. You’ll still have the loans to pay off, and the kids won’t be happy, but at least the charges will stop. (Of course, not getting the phones in the first place was an option too in the beginning, but it’s too late for that now.)

The analogy here is, of course, government spending and the national debt. We want the debt to be smaller, but anytime someone proposes to cut spending, they’re treated like heartless monsters who want to destroy people’s lives. But there really aren’t a lot of choices. We can cut spending, even to worthwhile projects, or we can keep taking out loans (which just increases the problem, obviously). There’s always raising taxes, but that’s not really a solution either, because from the citizens’ perspective, having money taken away isn’t that much different from having money depreciate due to the debt. In the case of a family instead of the government, there is also the chance of increasing income. But the government doesn’t produce any wealth; it’s a cost center. So the only way to reduce debt is to reduce spending. Which means cutting stuff that’s valuable but doesn’t have to come from the government.

Needless to say, raising the debt by a third in four years makes me very unhappy.