Well meaning people feel they’re highlighting the threat of our nation’s exploding debt on coming generations by saying, “We’re mortgaging our kids future.” If only that were true.
Most Americans understand a mortgage to be a lien against their property that must be satisfied over a period of time, usually through monthly payments. When the full amount of the loan is returned the property becomes theirs, free and clear. Washington politicians have structured no such repayment schedule as it relates to our soon to be $16 trillion national debt.
No, the massive amount of red ink mounting daily, is not being rolled into some giant federal promissory note to be repaid over a number of years. This huge sum of money is being put on our children’s credit cards. They’re being forced to, unknowingly, take responsibility an unlimited line of credit.
Like most awful financial scams foisted on impressionable, naïve, youngsters, it seems rather appealing at first. Like most awful financial scams foisted on impressionable, naïve, youngsters, it ends horribly. This kind of arrangement generally results in one of two scenarios:
- The borrower spends a lifetime, fruitlessly paying interest only on a ballooning principle.
- The borrower, going broke, stops sending the checks.
To be clear, not a single penny of the $16 trillion borrowed by the U.S. government is being paid back. That would be bad enough if the entire sum was frozen, but it’s not. On the contrary, our indebtedness has been growing by more than a trillion dollars each of the last several years. There is no genuine end in sight to this deficit spending. Countless dollars will continue to be put on toddlers’ tabs. Their outlay covering the interest will continue to rise, along with the base amount of money on loan.
How can this generational disaster go unaddressed by our president and members of Congress? Perhaps they’re unable to grasp the menace of mounting, unsustainable, unlimited debt being paid on an interest only basis.
No. Politicians demonstrated they understood very well the fundamental dangers of this kind of financing scheme. Three years ago they came down very hard on these deceptive practices. They even passed a law. So what’s the problem? The new rules simply do not apply to the federal government…. which holds the largest share of our youths’ debt. Congress conveniently absolved themselves from their own legislation.
On May 22, 2009 President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act. According to a fact sheet from the White House Press Secretary’s Office,transparency was a very big part of this law. The legislation demanded those issuing debt, “….need to display, on periodic statements, how long it would take to pay off the existing balance – and the total interest cost – if the consumer paid only the minimum due. Issuers will also have to display the payment amount and total interest cost to pay off the existing balance in 36 months.”
Imagine the feds being made to comply with the same dictates they put on those bogey man, credit card outfits. The staggering results might look something like this:
John Doe, Federal Debt Disclosure Statement
Existing Balance=$52,000 Yearly Interest Cost @ 3.5%=$1,820
Paying the minimum amount due- Total Interest Cost= Incalculable.
Paying the minimum amount due- Date of Loan Satisfaction=Infinity
To repay the existing balance in 36 months @ 3.5% the breakout is:
Monthly payments-$1,523.71 Total Payments-$54,853.49 Total Interest Paid-$2,853.49
Is there any wonder why congress and the president both chose to exempt federal spending from such scrutiny? If they had to comply with the same standards they set for VISA, Master Card, et.al, their scam would be fully exposed.
Politicians are not mortgaging our kid’s future. They’re stealing it.