American Debt Greater Than Collective Networth, Budget Birddog Group Forecasts

American Debt Greater Than Collective Networth, Budget Birddog Group Forecasts

Subsidies, Savings Highlighted as Sinners and Saints

with John Michael Spinelli

Columbus, Ohio: Recent calculations forecasting that America's debts and other financial commitments will soon exceed the collective networth of its citizens, marks a historic first at precisely the wrong time, when the escape hatch out of a long, rough recession calls for massive new spending by a new president and congress.

The foreboding prediction of America under financial water came from the Peter G. Peterson Foundation (PGPF), the eponymous budget birddog group that's riding like Paul Revere to warn us about our financial crisis and how to avoid the disaster it will bring if presidents and other leaders don't act with dispatch.

In its latest newsletter, the group who made "I.O.U.S.A," a tale of how America accumulated its sky-high debt that was recently nominated for the Critics' Choice Awards for Best Documentary, said unfunded promises for social insurance programs such as Medicare, when combined with a drop in the networth of Americans due to lower home equity values, has brought the world's reigning super power to it s financial knees.

The foundation's dire warning is based on new consolidated federal financial statements as of September 30, 2008, numbers that do not reflect the additional toll taken by more recent market declines, bailout packages, and record October and November deficits.

Hard to fathom but all too true, the group's math show that $56.4 trillion in debts, liabilities, and unfunded promises for Medicare and Social Security is for the first time in the nation's history more than a total of household networth, which it pegged at $56.5 trillion.

"Given more recent developments, it's clear that America now owes more than its citizens are worth," said Foundation President and CEO David M. Walker, writing for the group's newletter. "Passing this shocking milestone highlights the need for President-elect Obama and the next Congress not only to turn the economy around and boost consumer confidence, but to put a process in place that will lead to tough choices getting made to strengthen the government's financial condition once the economy begins growing again."

In a related piece called "The Breadth of Brokeness" about the extent of government's problems, author Gene Steuerle outlines a dozen areas where President-elect Barack Obama and a new Democratic-led Congress can make changes.

Many government programs were created decades ago for a different economy, a different family and industry structure, and even a different understanding of our economic and cultural opportunities, says Steuerle, who observes that "many of the agonizing debates over the past three decades have represented a see-saw battle, more often over symbol than substance, leaving in place agencies and programs often moribund and incapable of meeting many modern needs."

Concerns expressed by Steuerle on various topics - health care, tax policy, social security, disability, environment, housing, consumer protection, antitrust, justice, transportation, education, pension policy - may appear on first glance as curmudgeonly, but seem eminently foresighted in their practicality and ability to plan ahead rather than react to.

But the sheer size of the financial picture it paints will be troubling to art lovers, who will come to realize that the rich paying more and individuals saving more are fundamentals to reaching the surface so America can again breath on its own, without resorting to artificial aid like foreign borrowing.

In a separate story on Ohio's worsening budget picture, Policy Matters Ohio, a non-partisan economic think tank, argues that the "roots of the current staggering financial catastrophe lie in over-reliance on the market, excessive deregulation, and our economy's failure to deliver for most families." PMO researchers say wages have been essentially stagnant for the typical worker since the late 1970s, despite rising productivity and tremendous growth in incomes at the very top. The group says "many families went deep into (poorly regulated) debt, which was "not sustainable, for individuals or the economy, and we're all now paying the price. With Obama's selections for various cabinet posts and regulatory agencies like the Securities and Exchange Commission, PMO's call for better regulation and better wages may be realized.

Focusing on the Buckeye State's budget hole of $7.3 billion, the largest in its history, PMO says "failure to fill it will lead to devastating cuts to essential services, services that currently provide the basics to children, families and communities." Further more, not filling it now will "suck money out of our economy just when we need to stabilize, leading to a deeper and longer recession." The research group says only the federal government can come through with aid to cities and states now. But criticizing a five-year incomee tax cut plan Ohio Republicans pushed through in 2005, PMO advises Gov. Ted Strickland and a split legislature to "stop further implementing tax cuts that were ill-advised in any economy and will deepen the crisis."

John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. To send a tip of comment, email ohionewsbureau@gmail.com