increasingly perilous fiscal future

For the umpteenth time, Andrew Sullivan bugs me by telling us we are on the edge of disaster...

One more reason to be worried about the U.S.'s increasingly perilous fiscal future is that it could well jeopardize the war on terror - which will need real resources for the foreseeable future....

I don't think Sullivan here is coming from any realm of rational calculation. He reminds me of people of my parent's generation who were scarred by the Depression. (Or a man I met once who had been in a Japanese POW camp, and kept piles of canned food in places like behind the sofa). Truth is, by current world standards, neither our deficits nor our national debt are excessive. And while our debt is growing, our assets are growing apace. And our assets are much larger than our debts. I recently noticed a figure for the amount of money just in American mutual funds�it was about a trillion dollars more than the national debt...

Charlene and I have a mortgage, and other debts, and some worrisome obligations, like putting kids through college. Sometimes it seems like we are being crushed with debt. But in fact, we could cash in our IRA's and pay off all our debts tomorrow. Or sell our house and pay off our debts and have a large sum left over. And part of our debt comes because we are investing in our businesses. This involves risks, but will likely leave us better off in the long run.

That's where this country is. We borrow money to be able to do more things. Some frivolous, some good investments, such as the War on Terror, the winning of which will pay off hugely in the future as the world becomes more stable and prosperous and more able to buy our products. And we can borrow money because many people both here and abroad think the US is a good investment and not likely to ever default.

NOTE: This is not an argument in favor of big government. We could be even more prosperous than we are without the burden of an obviously overweight public sector.

Posted by John Weidner at February 11, 2004 6:11 PM