Augusta Chronicle Editorial Staff
While we're busy bailing everyone out right now, we're throwing cold water on our children's future.
Yes, we need to deal with the short-term. And certainly Wall Street went on a tear late Thursday -- more than 400 points on the Dow -- when word got out that Treasury Secretary Henry Paulson was working on a program to stop an escalating financial crisis that had been sending the market tumbling for months, to the point of threatening the very foundation of the nation's financial system.
The tentative plan calls for creating something like the Resolution Trust Corp. that so successfully handled the early 1990s' savings-and-loan crisis.
Instead of dealing with the problem piecemeal -- bailing out some institutions but not others -- Paulson is taking a systemic approach, designed to fix the problem as a whole.
The government would take over ailing banks' bad debts stemming from the foreclosure crisis, thereby freeing them to again make loans and other transactions.
The plan still has to make its way through Congress, but for now confidence in the nation's financial institutions has been restored to a great extent, and the hope is that confidence will also ripple through the economy leading into the Christmas season.
That's the good news.
The bad news is that the bailouts are sending the national debt through the stratosphere.
And they're not even in our deficit-ridden federal budget.
First there was the $200 billion to keep mortgage giants Fannie Mae and Freddie Mack afloat, and then $85 billion to rescue "too-big-to-fail" insurer American International Group. Then the Federal Reserve Bank made another $180 billion available to other central banks and $105 billion to the banking system.
We understand the government's criteria for multi-billion dollar handouts. When Washington is honestly convinced that taxpayers' pocketbooks would be damaged less by taking on the higher debt burden than by letting a major private industry go under, then the bailout is probably justified.
But let's realize that all these costly lifelines are adding to our soaring $9 trillion national debt.
And remember: The government also is obligated to pay us more than $56 trillion in future retirement and health benefits through Social Security, Medicare and Medicaid -- and it has no idea where that money is coming from.
Moreover, most of our debt, such as in U.S. Treasury bonds, is purchased largely by less-than-friendly nations, which puts them in control of U.S. assets that they could cash out -- and crash our economy -- at any time. The reason they don't, at least for now, is that they would also be crashing their own economies.
Yet, this doesn't mean that the debt won't have to be paid back. And it will be future generations who'll be paying it back.
Think of what that means. This generation is trying to maintain our current standard of living by forcing our children and grandchildren to pay for it.
After we're long gone, they'll be paying billions back to the likes of communist China and radical Islam, such as Saudi Arabia.
The only way to reduce that debt burden is to cut -- or better yet, slash -- government spending. There's no other way to get the debt under control, much less bring it down.
We certainly can't tax our way out of it. We simply must reduce the size and cost of government.
The more we grow government -- because we have lost either the will or the inclination to live within our means -- the more we will add to the debt that future generations will carry. That is certainly not the legacy we should want to leave to our children and grandchildren.
It would be immoral.
