The root cause of the debt problem: lack of saving
To give future generations the standard of living we enjoy, we need to save (and productively invest) nearly a third of GDP. Today we save half as much. Families save very little, and have been saving less and less for 30 years. Government saves very little – it actually dissaves a lot. The specter of bankruptcy for Social Security and Medicare are a fruit of this national lack of prudence. Technical fixes won’t be more than more-or-less temporary patches unless the country, as a whole, saves more.
Government can begin by giving good example. Not all spending is equal. Not all government spending is bad. Not all government spending is good. Some spending is more valuable than other spending. Spending to improve productivity – on education or infrastructure – is more valuable than other kinds. We need to be courageous and generous. Current beneficiaries of government generosity need to look hard in the mirror and perhaps accept smaller benefits.
But families can’t assume that they can blame Washington. A family that doesn’t save 10% of its income is not being responsible towards itself or towards the country. We need to learn to live more sober, simple, detached lives – or we’ll force our grandchildren to live lives of penury.