Posts tagged with: debt

Blog author: rnothstine
posted by on Wednesday, August 24, 2011

My commentary this week addresses the importance of federalism and our fundamental founding principles in relation to the problems that plague the nation. There was once plenty of commentary and finger pointing in regards to setting a new tone of political and civil discourse in the nation. However, the more the Washington power structure is threatened by those unsatisfied with where the leadership is taking us, the more those demanding a return to first principles will be splattered with, at times, revolting words and admonishment from those who think they know best. The commentary is printed below:

The Folly of More Centralized Power

by Ray Nothstine

Americans’ satisfaction and feeling of connection with Washington has dwindled to an all time low. According to a recent Rasmussen survey, only 17 percent of likely voters believe that the federal government has the consent of the governed. The numbers are hardly surprising. Congress recently cut a deal to saddle Americans with trillions of dollars in more debt. Shortly thereafter, one congressional member lashed out at a town hall last weekend demanding the tea party, which has been pushing back against big government, “go straight to hell.”

President Barack Obama, whose approval has sunk to a new low, is trying to recast himself as a Washington outsider as he heaps more blame on Congress, which is not exactly winning any popularity contests these days either. In The Washington Post, a political strategist offered this assessment: “The best place for a politician to be in 2012 is not on the ballot.”

Disenchantment with Washington is of course nothing new, but many Americans have grown weary of leaders calling for added federal spending and demands for shared sacrifice by way of tax increases. Washington’s inability to balance budgets and restore fiscal responsibility, a problem magnified by a crippled economy, has also bankrupted the public trust. Citizens who take summer vacations to the nation’s capital can easily connect the dots as they observe a Washington Beltway that is booming with jobs and opportunity as tax dollars siphon into the region, even while their own communities are ravaged by job loss and businesses struggle under regulatory burdens.

Earlier this month Salon Magazine ran a piece titled “The Real Confidence Crisis,” which proclaims that the solution to a broken government buried in debt by entitlements, runaway spending, and disorder is — more government. In other words, government must only be managed properly to work for us again.

Similarly, Time Magazine in 2010 published an article asserting that Washington was ineffective because bills were written to pass Congress, not to be effective. The problem solvers of our national ills only need to convince people that government can be competent again. All that America needs is a new generation of skilled technocrats to babysit the federal bureaucracy.

In contrast to this solution, in Federalist No. 45, James Madison declared, “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite.” Madison further articulated the case against the centralization of power not specifically enumerated to the federal government by saying, “The powers reserved to the several states will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the state.”

The Acton Institute’s Principles for Budget Reform make the point that in order to solve the debt crisis and political crises that plague us, “it is incumbent to ask again the basic questions about the role of government, at federal as well as state and local levels.” Madison, the architect of the U.S. Constitution, also had a role in the development of Virginia’s Constitution. Included in that document are the lines, “That no free government, or the blessings of liberty, can be preserved to any people but by a firm adherence to justice, moderation, temperance, frugality, and virtue and by frequent recurrence to fundamental principles.”

Furthermore, those looking to the federal government to solve the nation’s ills and meet their needs will continue to be disappointed. People feel disconnected from their federal government not only because they are separated geographically, culturally, ideologically, but also because they believe that their access to the political process has been severed. They doubt whether their representatives actually have the best interests of the nation in mind.

Now more than ever, as Washington multiplies our country’s ailments instead of curing them, politicians will continue to attempt to shift the blame for a financially and morally broken government in their effort to cling to power. The fight for Washington to surrender power will produce an epic conflict, however. It’s not just the vitriolic rhetoric that evidences the upcoming battle; centralized power is now so sacred that, against any proposals to limit the powers of the state, some professional clergy stand guard, ready to encircle the bureaucracy in prayer and offer their bodies for arrest.

Some in our churches and in government may disparage the tea party, and even wish its members a speedy banishment to Hell. But the tea party might be the powerful reminder we need to remind us that Washington can’t create Heaven on Earth. The sooner we take that advice seriously, and get our house in order, the better off we’ll all be.

Over at ThinkChristian, I take the opportunity to sketch “what a comprehensive Christian response to the crisis of public and private debt might look like.” I focus “on five main areas: the individual, familial, ecclesial, economic, and political.” This is a brief and preliminary set of questions and observations.

But even so, I think even just provisional attempts to evaluate our values shows us that “the problems we face are far more than political – and far deeper than merely political solutions can hope to solve.”

Blog author: kspence
posted by on Monday, August 1, 2011

It looks like Congress will vote later today or this evening to raise the debt ceiling and avert a possible default by the United States Treasury. How the debt ceiling compromise will fair when measured against Acton’s Principles for Budget Reform it is too early to know, but one thing is certain: if the deal contains a single budget cut for even the most ineffective of social programs, we’ll hear screams of protest from Jim Wallis and his Circle of Protection.

Already parts of Washington are “livid over the extent of the deal’s domestic spending cuts, as well as the absence of any immediate tax hikes on wealthier Americans.” Coalitions that have a confused idea of the common good won’t like a debt deal that threatens to reflect economic realities and truths about the human person—and this plan doesn’t even have the support of many important conservatives.

As Jim Wallis explained the progressive Christian’s view of the debt negotiations:

Our country is in the midst of a clash between two competing moral visions, between those who believe in the common good, and those who believe individual good is the only good. A war has been declared on the poor…

Wallis reveals here a fundamental misunderstanding of the common good, and thus of politics. To Circle of Protection and its allies, the common good is achieved by higher taxation of the wealthy and redistribution of wealth: as everyone gets his check on the first of the month, justice is served. What redistributionists don’t understand is that simply running all the money through a common mill doesn’t mean you’re serving the common good. A large administrative state is not a sign of flourishing communal society.

An idea of the common good must be grounded in a correct vision of human nature, and the class warfare lens through which Wallis views the world distorts by materialism his perception. What is called the common good is in fact the common advantage, and belief in the common advantage is indeed belief that “individual good is the only good.”

Government for the sake of the common good requires a free citizenry, because without the freedom to make choices of moral consequence, a people cannot do good. Thus, taking the means of private charity and redistributing it for the sake of material equality is not practicing government for the common good.

Blog author: lglinzak
posted by on Wednesday, July 27, 2011

Rev. Sirico was interviewed by Kathryn Jean Lopez of National Review Online on the national debt of the United States, the debt ceiling, and the moral issues of the budget debate. Their discussion spanned from how a prudent, discerning legislator should look at the debt-ceiling debate to the mind set needed when considering spending cuts:

LOPEZ: So many spending cuts can be spun, some perhaps legitimately so, as mean (and liberal policymakers and activists — many with the best of intentions — are all too happy to spin them). How should we be thinking of such things? Does it require a change in thinking?

SIRICO: The question should be right-or-wrong, prudent-or-imprudent, not mean-or-nice. Religious leaders bring their principles into the political debate, but the application of those principles is a prudential question, not an emotional one. It’s also an opportunity for us to reflect upon what governments really need to do, and what is more appropriately done by non-state entities — and I’m not talking about the ones (such as many religiously associated charities and relief agencies) that receive the bulk of their funding from various federal-government contracts.

Yes, a change of thinking is required. If cuts are to be made, then Americans cannot operate under the mentality that “it is acceptable to cut government programs as long as it isn’t government programs that I benefit from.” The core problem is that few are eager to take the pain now. If we don’t, the pain will be much more unbearable down the road. Consider how we got into this situation in the first place.

In the end, reining in spending will protect programs that aid those truly in need, and provide the space for non-state and non-government-funded agencies to undertake much-needed work — that is, to secure the entire infrastructure that makes prosperity possible. That not only creates the grounds for economic flourishing, but preserves human dignity.

Click here to read the full interview.

Blog author: lglinzak
posted by on Wednesday, July 13, 2011

Kishore Jayabalan, Director of Istituto Acton in Rome, was interviewed by Vatican Radio to discuss the Italian budget. Italy has a large budget crisis, and if it isn’t resolved, it may face serious financial problems similar to those experienced by Greece.

Lawmakers in Italy have begun working on austerity measures, which was the topic of Jayabalan’s interview:

“Austerity is fairly important for the Italian economy,” says Kishore Jayabalan, the director of the Rome office of the Acton Institute. But he says even with austerity, Italy will need economic growth to pay its debts.

[…]

“They are creating all kinds of impediments for economic growth. If you want to get the Italian economy reformed, the political class not only is going to have to do things like get rid of regulations, but really cut down the bureaucracy, because that is what is really bringing down the Italian economy,” Jayabalan said.

Click here to read the full article and listen to the interview.

My editorial, “Intergenerational Ethics and Economics,” appears in the latest issue of the Journal of Markets & Morality (more details about that issue here). In this short piece I explore some of the implications and intergenerational consequences of public debt. For this I take my point of departure with the much-discussed “A Call for Intergenerational Justice,” but I also point out the importance of considering opportunity cost and how that concept has been applied in an analogous conversation about climate change. Focusing particularly on the current generations of workers, however, I observe:

Younger workers have not had as much time in the workplace to earn wages, collect benefits, and save, as those who have been working for decades and are nearing or have already entered retirement. As we learn from what has been called the “miracle of compounding interest,” small deductions of available capital at earlier points in time have major consequences for long-term growth.

In a recent piece for City Journal, Nicole Gelinas reflects on the federal government’s move to take on troubled securities from private firms. She writes,

The politicians we elect have three choices—the same choices they had four years ago. They can admit that this debt isn’t worth much and allow the financial sector to bear the consequences. They can hope that the Fed tries to use inflation to raise the price of everything else, making the debt seem a lighter burden in comparison. Or they can maintain their silence, letting the financial sector take another half-decade or more to make enough money on new ventures so that it can finally admit what it should have admitted back in the fall of 2007: bad debt is never good. At least the Fed acknowledges this strategy: it says that it’s using “time” to manage toxic securities and “minimize disruption to the financial markets.” But prolonging government control of financial markets just prolongs investors’ uncertainty.

Her conclusion underscores what I contend in the editorial about the importance of opportunity cost and the intergenerational effects of (in)action: “As the Fed notes, the cost of this policy isn’t measured in dollars but in something more precious: time. Washington’s refusal to confront the debt problem is costing millions the most productive years of their lives.”

Also in the current issue of the journal, James Alvey explores “James M. Buchanan on the Ethics of Public Debt and Default.” Buchanan has a good deal of interest to say on these questions, and Alvey concludes that “Buchanan’s favorite policy agenda, constitutional/legal limitations on public spending, deficits, and debt, needs to be revisited.”

Blog author: rnothstine
posted by on Tuesday, June 21, 2011

We’ve all heard of presidents, governors, and other civil leaders calling citizens to prayer in times of great need. In April, Texas governor Rick Perry called on his citizens to pray for rain because of an extreme drought.

It looks like the mayor of Harrisburg, Pa. is about to embark on a three-day fast and prayer practice for help with the city’s bleak budget deficit. The idea of the fasting and prayer is meant to help unite citizens to solve the crisis. Bravo, if that is the case. One would have to be concerned though if religion is invoked to avoid the hard choices facing government everywhere and it morphs into the ideological “What Would Jesus Cut?”

In a news story on the city’s prayer and fast effort, a local pastor explained:

The Rev. Herb Stoner, pastor of adult training at Christ Community Church of Camp Hill, said the answers to problems in Harrisburg and the region won’t be found in the wisdom or ability of humans.

This much is true, given the financial hole leaders of the city have dug for its citizens. I suspect we might see even more calls for divine help with the debt crisis, as it becomes even more apparent how serious and distressing it is for most of the people across this land. In a speech earlier this year, Indiana Governor Mitch Daniels called the federal debt “the new red menace.” If the comparison rings true, history tells us it will require colossal sacrifice and resolve to combat the national debt.

In Crisis Magazine, Acton Research Director Samuel Gregg has a new article that looks at how Catholics reflect on a wide range of financial questions ranging from the federal government’s fiscal woes to consumer debt to a fragile banking system.

Today one looks in vain for Catholic thinkers studying our debt and deficit problems from standpoints equally well-informed by economics and sound Catholic moral reflection. We don’t, for instance, hear many Catholic voices speaking publically about the moral virtues essential for the management of finances such as prudent risk-taking, thrift, promise-keeping, and assuming responsibility for our debts — private or public.

Instead, one finds broad admonitions such as “put the interests of the poor first” in an age of budget-cutting. The desire to watch out for the poor’s well being in an environment of fiscal restraint is laudable. But that’s not a reason to remain silent about the often morally-questionable choices and policies that helped create our personal and public debt dilemmas in the first place.

One Catholic who has proved willing to engage these issues is none other than Pope Benedict XVI. In his 2010 interview book Light of the World, Benedict pointed to a deeper moral disorder associated with the running-up of high levels of private and public debt. The willingness on the part of many people and governments to do so means, Benedict wrote, “we are living at the expense of future generations.”

In other words, someone has to pay for all this debt. And clearly many Western Europeans and Americans seem quite happy for their children to pick up the bill. That’s a rather flagrant violation of intergenerational solidarity.

Read “Debt, Finance, and Catholics” on the Crisis Magazine website.

Blog author: jballor
posted by on Friday, April 29, 2011

The curious alignment of Good Friday and Earth Day last week sparked much reflection about the relationship between the natural world and religious faith, but the previous forty days also manifested a noteworthy confluence of worldly and otherworldly concerns. The season of Lent occasioned a host of religious voices to speak out not simply about spiritual hunger, but about material needs too, as political debates in the nation’s capital and around the country focused on what to do about federal spending.

As I explore in an “On the Square” feature at the First Things site today, such discussions “often generate more heat than light.” In “Budget Cuts of Biblical Proportions,” I note the recent formation of a “Circle of Protection” around “programs that meet the essential needs of hungry and poor people at home and abroad.” I also highlight “A Call for Intergenerational Justice: A Christian Proposal for the American Debt Crisis,” which I consider a “valiant attempt to elevate the debate.” If the point of the Call was to raise the discourse to more adult levels, then I think it must be judged a success (insofar as it has had any broader impact). Last week’s roundtable discussion at AEI attests to this, I think.

In the final analysis, however, I judge the Call to suffer the same fate as these other similar campaigns: “Instead of focusing on ways to empower other institutions and levels of government and galvanize them to relieve the burden of the federal government, these efforts simply feed into the fundamentally false dilemma of federal action or no action at all.”

One of the basic problems is that we no longer agree as a society what government is for, what the telos or purpose of the institution of the state is. I argue that we need to reconsider the basic purposes of government, which will then provide us with a framework for prioritizing certain kinds of spending. I also argue that the strategy to pursue where the true costs of government have been hidden by deficit spending and when there is a system that has been “trying to do too much for too many for too long” is to work to privatize and localize, rather than to nationalize and centralize.

This kind of strategy really does offer an alternative to the “lazy” and “unimaginative” options of simply raising taxes (on the rich, the middle class, or both) or cutting spending. Michael Gerson recently said that across-the-board and “indiscriminate cuts are an abdication of governing.” On this view, then, cutting spending and retaining relative spending priorities is not a viable option.

An illusion behind all of these Christian campaigns on the budget crisis is the idea that we can skip over these questions and still have something worthwhile to contribute to the national discussion. This error lies in the belief, as the Princeton ethicist Paul Ramsey put it,

that there is such a thing as hybrid or satyrlike statements of moral fact within the scope of prophecy and precise preaching, and within the competence of Christian deliberation as such, or the deliberations of Christians as such. Statements of moral fact would melt together moral judgments and fact verdicts, principle and application, into something else that is somehow neither and both.

The mistaken impression is that so long as particular programs or policies aren’t explicitly identified in these calls then we are still operating within the legitimate realm of principle rather than making prudential judgments about specifics.

Gerson also says, “Serving the public interest requires a determination of what works and what doesn’t. This is one of the primary duties of those in government.” This underscores one of the sticking points that arose from our discussion of the Call last week. There is a great deal loaded into the term “effective” in the document. One person’s “effective” program is another’s wasteful and superfluous expenditure. Every interest group contends that its programs are the ones that are essential and indispensable. Everyone has their own favorite projects. So again, I ask, what makes a program effective? The Call doesn’t help us here.

So the dynamic of our situation is this: we no longer agree about what the good society looks like, or what government’s role at various levels is relative to that goal, and so we can no longer agree on ways to progress towards that goal. Forming “circles of protection” and calling for intergenerational justice will simply continue to nibble at the edges of and paper over these more fundamental problems until such time as we can begin to answer some of these questions. In the case of the budget this means getting back to basics. But more fundamentally it means agreeing about where we ought to be going.

Thus, writes C. S. Lewis, “Progress means getting nearer the place you want to be.” The question really comes down to where we want to be and what it will look like when we get there; and on that we don’t all agree.

Blog author: jballor
posted by on Wednesday, March 30, 2011

In today’s Acton Commentary, “Debt and the Birth Dearth,” I examine the interrelationship between demographics, economics, and morality, especially within the context of America’s current public debt crisis.

I conclude by pointing to the spiritual nature of our “debts”:

Jesus taught Christians to pray, “Forgive us our debts.” If we do not renew and reform our culture along the lines suggested here, a renewal that must be led by Christians acting as agents of transformative grace, the debts for which we must pray forgiveness will be far weightier than those incurred by the federal government.

In a primary sense, of course, all of our debts, sins, and transgressions are more than we can afford to make recompense for. This is why the atoning work of Jesus Christ, in his life, death, and resurrection, is of fundamental importance.

But this reality doesn’t remove our responsibility to respond to God’s saving grace in thankfulness and in “fear and trembling.” Instead Christ’s work makes our even meager attempts at faithfulness possible and meaningful.

The Heidelberg Catechism describes this daily conversion of the Christian, the turning away from sin and toward Christ, in terms of death and life, mortification and vivification. This “mortification of the old man” is a dying-to-self, “a sincere sorrow of heart, that we have provoked God by our sins; and more and more to hate and flee from them.” Vivification, by contrast, is “a sincere joy of heart in God, through Christ, and with love and delight to live according to the will of God in all good works.”

A critical part of this “joy of heart in God, through Christ,” must manifest itself in the celebration of God’s gift of life itself. This includes promoting faithful procreation and parenting, and as Russell Moore has argued so well, promoting a culture of adoption.

Luther famously described parenthood as a sacred calling.

Preaching on “The Estate of Marriage” in 1522, Luther said:

Now observe that when that clever harlot, our natural reason (which the pagans followed in trying to be most clever), takes a look at married life, she turns up her nose and says, “Alas, must I rock the baby, wash its diapers, make its bed, smell its stench, stay up nights with it, take care of it when it cries, heal its rashes and sores, and on top of that care for my wife, provide for her, labor at my trade, take care of this and take care of that, do this and do that, endure this and endure that, and whatever else of bitterness and drudgery married life involves? What, should I make such a prisoner of myself? O you poor, wretched fellow, have you taken a wife? Fie, fie upon such wretchedness and bitterness! It is better to remain free and lead a peaceful, carefree life; I will become a priest or a nun and compel my children to do likewise.”

What then does Christian faith say to this? It opens its eyes, looks upon all these insignificant, distasteful, and despised duties in the Spirit, and is aware that they are all adorned with divine approval as with the costliest gold and jewels. It says, “O God, because I am certain that thou hast created me as a man and hast from my body begotten this child, I also know for a certainty that it meets with thy perfect pleasure. I confess to thee that I am not worthy to rock the little babe or wash its diapers, or to be entrusted with the care of the child and its mother. How is it that I, without any merit, have come to this distinction of being certain that I am serving thy creature and thy most precious will? O how gladly will I do so, though the duties should be even more insignificant and despised. Neither frost nor heat, neither drudgery nor labor, will distress or dissuade me, for I am certain that it is thus pleasing in thy sight.”

A wife too should regard her duties in the same light, as she suckles the child, rocks and bathes it, and cares for it in other ways; and as she busies herself with other duties and renders help and obedience to her husband. These are truly golden and noble works. This is also how to comfort and encourage a woman in the pangs of childbirth, not by repeating St. Margaret legends and other silly old wives’ tales but by speaking thus, “Dear Grete, remember that you are a woman, and that this work of God in you is pleasing to him. Trust joyfully in his will, and let him have his way with you. Work with all your might to bring forth the child. Should it mean your death, then depart happily, for you will die in a noble deed and in subservience to God. If you were not a woman you should now wish to be one for the sake of this very work alone, that you might thus gloriously suffer and even die in the performance of God’s work and will. For here you have the word of God, who so created you and implanted within you this extremity.” Tell me, is not this indeed (as Solomon says [Prov. 18:22]) “to obtain favor from the Lord,” even in the midst of such extremity?

Now you tell me, when a father goes ahead and washes diapers or performs some other mean task for his child, and someone ridicules him as an effeminate fool—though that father is acting in the spirit just described and in Christian faith—my dear fellow you tell me, which of the two is most keenly ridiculing the other? God, with all his angels and creatures, is smiling—not because that father is washing diapers, but because he is doing so in Christian faith. Those who sneer at him and see only the task but not the faith are ridiculing God with all his creatures, as the biggest fool on earth. Indeed, they are only ridiculing themselves; with all their cleverness they are nothing but devil’s fools.

[Martin Luther, vol. 45, Luther's Works, Vol. 45: The Christian in Society II, ed. Jaroslav Jan Pelikan, Hilton C. Oswald and Helmut T. Lehmann, Luther's Works, 39-41 (Philadelphia: Fortress Press, 1999).]

Thus Christians, in celebrating life, marriage, family, and children, must risk being worldly derision and ridicule, relying on heavenly wisdom rather than the devil’s foolishness.