June 28, 2017

Comments on government debt

David Potter

With the current debates going on in Congress about raising the debt ceiling and other measures with regard to the US debt, reference to ancient wisdom on such matters would serve us well.

“The … borrower is servant to the lender”–Proverbs 22:7.

The biggest US creditor is the People’s Republic of China, our biggest rival for influence in the Pacific and our biggest economic competitor. The interest on our debt to China, even at the current low interest rates, is enough to underwrite their budget for the entire Red Army. This fact may or may not scare you, but think how the Japanese, South Koreans and Taiwanese feel. What will the future of Christian missions in the Far East look like with China becoming more and more ascendant?

“The wicked borroweth, and payeth not again …”–Psalm 37:21.

What about someone who borrows and, due to some unforeseen misfortune, does not have the means to repay? Such a person might be unwise. But what of a person who borrows with no intention of paying back? He is a thief. “Wicked” is not too strong a term to describe him.

First, there is the problem of the national debt. Every six hours or so, the US borrows one billion dollars. That’s billion, with a “b.” The federal government is robbing our children and grandchildren in order to finance their pet programs. “Making the rich pay their fair share” won’t work, because even if we confiscated all of their wealth, not just their income, we could only run the federal government for a few months. (See also Proverbs 29:4, “The king by judgment establisheth the land: but he that receiveth gifts overthroweth it.” The expression “receiveth gifts” probably refers to exacting high taxes.)

Let us also consider a couple of items in the federal budget which go far beyond what we categorize as the national debt: Social Security and Medicare. When each of these programs began, many more people were paying into them than were drawing out. Generous benefits for retirees were possible because retirees were far fewer than wage earners. With the retirement of Baby Boomers (like yours truly) beginning, the ratio of retirees to wage earners will drop dramatically. There simply is not enough money to underwrite all the benefits promised.

Such situations come up in the private sector. They are called “Ponzi schemes.” In a Ponzi scheme, the scam artist promises huge returns to investors. He pays the promised returns to the initial investors using the money of the next wave of investors and so on until he runs out of new investors and the scheme collapses, with later investors losing all of their money. This scam was illegal even before Charles Ponzi lent his name to it in the early 1920’s.

The only difference between Social Security and Medicare, on the one hand, and a Ponzi scheme on the other hand, is that Congress enacted the first two and they are legal, while the latter is illegal. If Social Security and Medicare were under the same laws as the private sector, Congress and the President would be in jail. Can Social Security and Medicare be reformed so that they are solvent? Perhaps. But prospects do not look good.

As Herbert Stein put it, “If something cannot go on forever, it will stop.” The only question is how loud the crash will be when it does. The longer we put off the day of reckoning, the more severe the consequences will be.

Our hope is not in politics or politicians, but in the Lord. “In God have I put my trust: I will not be afraid what man can do unto me.” Psalm 56:11.


David Potter serves as a missionary in Hungary with Baptist World Mission.


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