I'll give the world leaders who attended the G-20 Summit in Toronto this weekend some credit for talking a good game about debt. For the first time in recent memory, the focus of such high level meetings wasn't about falsely inflating the financial health of the major economic powers--but rather admitting that years and years of short-sighted, politically-popular decisions have shackled those countries with unsustainable austerity and social programs. Now we'll see if all that talk is backed up with actual action.
Most of the nations promised to cut their current national debts in half by 2013--or should I say they promised to cut the "projected" debts in half. Meaning the US debt of 13-trillion dollars won't be cut to 6.5 trillion--instead, President Obama just promised to keep the increases in that debt to just 50-percent of what we are on pace to rack up right now. I know the President and his advisors believe that their increased spending will somehow reduce the federal deficit in the future by "finding savings in Medicare" and other programs.
Speaking of the President, he encouraged the 19 other world leaders to continue to go into debt to "stimulate" their economies. But those who don't subscribe to theoretical Keynesian Economics and who actually live in the real world will likely tell the President to pound sand on that one. I'm pretty sure they realize a small amount of pain now, can go along way toward guaranteeing we don't suffer even greater pain in the future.
We hear all the time about how we "don't have anymore to cut" in public budgets--but one area that can be reduced without actually affecting services is interest on debt. As of June 1st, the country has spent 248-billion dollars in interest payments. That money didn't help seniors buy drugs, it didn't keep illegal aliens from sneaking into the country, it didn't provide free or reduced lunches for school children, it didn't help find Osama Bin Laden. It was merely transferred from the Treasury to banks (likely in China) in a few clicks of a computer keyboard.
Like foregoing spending 15-percent of our current personal income so we can put that into retirement accounts now guaratees our personal financial futures--so too will reducing government spending now guarantee services and jobs tomorrow. I think some world leaders left the G20 summit seeing that light. Others, it appears, may still be in the dark.