Working our way out of debt

Accumulating more debt than you can pay off can’t be justified, let alone be seen as a good thing.

If there’s a priority that should be atop every American’s to-do list, it’s to get our country’s financial house in order; to check the avalanche of debt that has passed $20 trillion and roars down the mountain gaining momentum. As we’ve editorialized for years now, this is not a presidential or congressional problem so much as it is an individual problem. The sooner we, the citizenry, insist upon paying our fair share and in some cases tightening our belts a little snugger, the sooner that avalanche will melt and the mountain can stand majestic again.

But in the immediate aftermath of another date with the tax collector, do not despair. That gets us nowhere. Our optimism, our can-do attitude and our unleashed potential to produce will win out.

For a different perspective on the national debt, we refer you to a Forbes piece penned last November by Michael Foster, lead research analyst for Contrarian Outlook.

Foster notes that as of his writing several months ago, the U.S. owes $60,890 for every man, woman and child. That’s more than a quarter million of debt for every family of four; staggering.

But Foster points out that the nation’s GDP, its total value in goods and services produced, is $19.25 trillion.

“This means the country could pay off almost all of its debts with just 12 months of economic production,” he writes.

While that won’t happen, look at it this way, according to Foster:

“The average US household makes $59,039 per year. For the average household to have the same 103 percent debt-to-annual income ratio the US government has, they’d need to have an outstanding loan on a couple of average-cost cars — but no mortgage, no student loans, no personal loans, and no credit card debt.

“Would you say that household was on the brink of financial collapse? Of course not.”

Another view, compliments of Mr. Foster’s analysis: The nation owes $20 trillion, a massive sum. But the Federal Reserve’s estimated balance sheet that includes households, nonprofits and banks shows assets of $128.18 trillion. That’s a positive ratio most American families would love to have.

Together, we must strengthen our country by exercising fiscal discipline and reducing personal and national debt, but the other side of the equation shouldn’t be ignored. Feed the fires that stoke American production and the future is anything but bleak.