What happened to saving for a rainy day? | Opinion
When I grew up in the 1970s, my dad taught me and my sisters to “always save for rainy days”.
He was a child of the Depression, after all, one of the longest periods of “rainy days” Americans have ever known.
In 2021, however, America’s new national mantra appears to be “borrow and spend like the sun will always shine!” “
Our federal government has certainly followed this approach.
Of course, because the COVID-19 pandemic and lockdowns crushed the economy and increased huge social costs, almost everyone agreed that emergency spending measures were needed.
But the federal government was already heading for a $ 2.3 trillion shortfall in 2021 – and that was before President Joe Biden’s $ 1.9 trillion coronavirus relief bill passed. and the huge pork sandwich.
The truth is, pandemic or no pandemic, Republicans and Democrats are addicted to debt.
Since 1970, federal spending, deficits and debt – now and rising $ 28 trillion – have exploded.
President Clinton has successfully balanced the federal budget. In fact, it has run a surplus in its last four budgets – the only surpluses of the past half century.
But President Trump has increased our national debt by nearly $ 7 trillion in four years – in part because of the COVID crisis.
President Obama has increased our debt by over $ 8 trillion, in part because of the financial crisis he inherited.
President Bush II has increased our debt by over $ 6 trillion – in part because of the tech stock crisis he inherited.
The slogan “never let a good crisis go to waste” is popular in Washington, DC
But our dependence on debt is not limited to government. Americans “spend like drunken sailors” for a long time.
According to personal finance website The Balance, consumer debt hit a record high of over $ 4.2 trillion in February 2020.
Consumer debt is made up of two types of debt: revolving debt, which is primarily credit card debt, and non-revolving debt, such as car loans or university loans.
Revolving debt hit an all-time high in February 2020, just before the pandemic, but it actually fell in 2020.
Thanks to COVID-19 lockdowns that shut down so much of the economy, Americans cut spending in 2020 and used their credit cards less.
The bad news, Libra reports, is that non-revolving debt – auto loans and college debt – has increased
Because more and more Americans are taking advantage of historically low interest rates to buy new SUVs and Tesla.
And because millions of young people have borrowed hundreds of billions of dollars to cover rising tuition fees, which the government says only increased by 1,417 percent from 1977, Americans must now over $ 1.7 trillion in student debt. .
So the smart solution to college debt is to tackle the root cause of these massive tuition fee increases, right?
Nope! The government’s solution is to borrow even more money to alleviate the debt that students have voluntarily incurred.
Some super-progressive Democratic senators are even urging President Biden to pay off or write off up to $ 50,000 in a student’s tuition debt.
How can our addiction to borrowing end well, everyone is guessing. We are clearly preparing ourselves – and our children – for a very unpleasant outcome.
All I’m sure is that the mantra for 2021 is spread and it’s this: “Never save for a rainy day!”
Tom Purcell is a national union Pittsburgh Tribune-Revue journalist. Send your comments to Tom at [email protected]