Posts tagged with: debt

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
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.

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.

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
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.