Debt Debate
On July 4, 2011, Riley McGowen, a 20 year old student at NG State University, was flying home from vacationing at his uncle’s ranch when he experience a life-changing epiphany.
As a new member of the Young Republicans at NG State, he had recently signed a pledge to support the proposed 28th Amendment to the United States Constitution.
The amendment simply stated:
The Government of the United States of America
shall, by spending no more than it receives in
revenues, balance its budget every year.
Riley was a double major (Economics and Political Science) at NG State, and he was proud to support a Constitutional Amendment that required the Federal Government to display the same fiscal responsibility its own citizens were. In fact, Riley had signed an accompanying petition that was to be sent to every US Senator and Representative as well as all senior members of the President’s administration stating the obvious:
Dear _____________:
For too long, the United States Government has served as a poor example to the rest of the country. While its citizens, families, organizations and businesses do not accumulate increasing amounts of debt by borrowing money, the Federal Government continues to spend far more each year than it takes in in revenues. This must stop. The United States must be held accountable, just as all persons and private enterprises within its borders are.
Sincerely
Riley McGowen
Young Republicans
NG State University
Riley had engaged in heated arguments with his classmates who opposed the proposed Amendment, but he knew that given the unswerving support from the Republican leaders in Congress that he would win the debate. America, like all Americans, had to balance its budget each and every year.
Members of the campus’ Young Democrats had countered by asking, “Does that mean that your uncle will no longer be able to take special tax deductions for the corporate jet he uses to fly you across the country all the time?”
Riley was outraged, “How dare you touch those tax provisions that are written into law. Take them away and my uncle’s petroleum exploration company could not create the jobs America needs.”
But Riley was taunted further. “Does your uncle’s company balance its budget each year?”
“Certainly. Its shareholders and bondholders wouldn’t allow it to do otherwise. Haven’t you taken a business class yet?”
However, Riley couldn’t seem to get away from the barrage of questions. “Aren't the shareholders and bondholders exactly the people the company is borrowing from?”
“You might say that,” responded Riley. “But whoever invested in the company gets bonds or shares of stocks in return—so the company’s Annual Statement shows that its accounts are balanced.”
“So all you’re asking is that the US Government also issue bonds to whomever it borrows money from?”
“Hey dude, it does.”
“We’re getting nowhere fast,” interjected another Young Democrat. “What we need to know from Riley is . . . Riley, you tell us. Do you support the Amendment because the Federal Government is not balancing its books each year like American families have to?”
“Now, that’s the right question,” replied Riley.
“What about students (you excepted) who have to take out student loans to go to college? Aren’t they accumulating debt—just like the Federal Government?”
“They are,” Riley responded. “And they better be able to pay back those loans.”
“But you aren’t going to make all of us balance our budgets each year by not going into debt, are you?” asked one Democrat.
“My single mom has a car and she didn’t pay cash,” said another Young Democrat. “Does that mean she’s making the same mistake the Federal Government and your uncle’s business are?”
“Doesn’t everybody pay cash for their car?” Riley asked.
“My parents say they own our home, but I know they took out a mortgage to buy it,” said another Young Democrat.
“It’s like I know all these people and businesses are in debt. It’s just that the Federal Government has to balance its budget so it won’t go further into debt,” Riley responded.
“Since your Republican leadership is basing its arguments concerning a balanced budget Amendment on the idea that all the rest of us have to balance our budgets—does that mean all the rest of us will have to balance our budgets, and I don’t mean by borrowing money, each year?”
“Hey,” said another Young Democrat. “If you’re advocating that when the Amendment goes into effect and the US Government can no longer borrow money to balance its budget, and you’re saying that all of us will have to live up to the example we are already supposedly setting for the government—that means I won’t be able to go into debt to continue my education.”
“And I won’t be able to borrow to buy a house,” said another.
“To live up to the ideals you are setting up for the Federal Government, we will need to have a cash only economy—or if anyone borrows from anyone else, they have to pay back the money by the end of the year to balance their household budgets,” said another Democrat, summing up the group’s argument.
The epiphany young Riley McGowen had that July 4, 2011 as he was flying home in his uncle’s tax subsidized private jet was that as soon as he landed he was going to reregister as a Democrat.
After all, while the US Federal debt stands at about $14.5 trillion, US citizens owe around $16 trillion of mortgage, consumer, credit card and student loan debt. Riley realized that just like households and businesses, the goal shouldn’t be to eliminate all debt but by limiting our military ventures and tax loopholes, borrow wisely and keep it to a minimum.
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