There’s a term used to describe the situation where a debtor repays a debt through labor. It’s what’s known as debt bondage, and it’s an ugly scenario that involves work for little pay and a devaluation of labor and skill. It’s conceptually similar to indentured servitude, an idea that makes modern Americans cringe.
But there was a time when Americans accepted indentured servitude as a fact of life, and if the United States accepts President Obama’s budget plan, indentured servitude is something we may find ourselves having to accept again. This time, however, the masters of our fate will be those foreign nations that own U.S. debt. Make no mistake: they are many, and our debt is large.
According to some estimates, President Obama’s new budget will increase new spending by $8.7 trillion and new borrowing by $13 trillion over the next decade. The budget also sets discretionary spending at $353 billion above the recommendations of President Obama’s own debt commission. What this means is that the United States will continue to slide into debt over the next 10 years because spending will increase. It also means that tax hikes will be imposed on families and small businesses, ostensibly to raise money toward shrinking the deficit — which is defined as the amount the U.S. government spends over the amount it raises in taxes. The budget plan suggests an all-time record deficit of $1.65 trillion this year.
It also means that those countries that own our debt, such as communist China, can begin to influence our policy in areas where we have historically clashed. For example, the Chinese may be able to influence our foreign policy decisions or insist that we look the other way at their many human rights abuses. And the U.S. will comply because our creditors are our masters.
Further, those investors who lend the U.S. money will likely consider investment here riskier and will therefore demand a higher return on their investments. The law of supply and demand dictates that if this begin to happen, mortgage rates, the cost of doing business and just about everything else in the country will increase in cost. This will be another tax on working families.
And here’s where the idea of bondage — slavery of a sort — should be taken seriously. Considering the amount of money we owe to countries such as China ($891.6 billion), Japan ($883.6 billion), and various oil exporters ($218 billion), what recourse would we have if we refused to stop spending and continued to increase our debt?
Our new reality will be comprised of harder and longer workdays for lower wages. We’ll be made to accept substandard products, lower standards of living and higher costs. The trend of outsourcing employment will accelerate and the American dream of the self-made man and woman will slink off to wherever dreams go to die.
Even more sobering is the realization that although the few creditors mentioned above top the field, there are many others. The list is more than 20 strong and the amount of debt we owe totals over $4 trillion.
There may be a glimmer of hope on the horizon for those who’ve begun to recognize that their future may have to be sold to pay off a debt: Republicans are beginning to wake up. A new House Republican Study report found that “the amount of new debt proposed by the new Obama budget released [Monday] is more than the total amount of debt accumulated by the federal government from 1789 until January 20, 2009.” Republicans have begun to push back, so much so that President Obama was forced to immediately hold a press conference following the release of his budget to address the opposition to it. He told the country he was applying a scalpel to the budget rather than a machete.
It is important in the face of this immediate backlash that conservatives hold their stance and continue to back forward-thinking legislation such as the Balanced Budget Amendment. Of course, leaders such as the Hon. Ken Blackwell, chairman of Pass the Balanced Budget Amendment, recognize the importance of such bold legislation. It is crucial that Congress passes this amendment now to protect not only future generations but also today’s working families.
Mr. President, now is not the time for meaningless gestures, superficial tweaks and minor cosmetic touches. The budget needs major surgery; the kind that may require substantial recovery time but is absolutely necessary for the health of our nation’s economy and our future. We will cope with that painful recovery if it means breaking the chains that bind us instead of passing a legacy of debt slavery on to our children.
Chuck Warren is a Partner with Silver Bullet, LLC, a Nevada-based public affairs firm specializing in initiative qualification, grassroots and crisis communication. He is on the board of directors for Pass the Balanced Budget Amendment.