Sunday, November 29, 2009

It's beginning to look a lot like Christmas...

My wife informed me the other day that we are cutting back on our Christmas spending this year. Sounds like a good plan to me, although I’ve decided to take a wary “I’ll believe it when I see it” approach to the whole deal. There’s always the possibility that I’ll end up being a real schmuck on Christmas morning if I over-estimate what “cutting back” actually means, maybe even worse than the time I bought her a pant suit that was two sizes too big. Or the time I bought her a new can opener that was just like the one I had given her the Christmas before.

We never have been ones to go overboard buying presents. Socks and underwear have always been a staple. Our children and grandchildren have probably fared better than some and worse than others, but we’ve never bought anything for Christmas that we couldn’t pay for at the time. It seems to work out better that way, and it certainly makes January and February a lot more tolerable.

I’ve heard of people that were still paying for last years presents when they started buying this years presents. I imagine that has to take some of the joy out of giving. Credit and credit cards seem to be the major culprits in the deal. People tend to lose track of what they’re spending if they don’t have to fork over the cash on the spot. A study by Debt.com found that people who pay with credit cards tend to spend about 25% more than people who pay with cash. And then there’s that interest thing to contend with.

It’s beginning to look a lot like Christmas up in Washington, too. They don’t really have a pay as you go system in place up there anymore, and you just about have to believe that our representatives have lost track of how much they’re spending. Our national debt passed $12 trillion sometime last month, but that’s only if you don’t add in our future obligations to Social Security, Medicare, and Medicaid. That kicks it up to $60 or $70 trillion, give or take a trillion or two.

Like people who charge more on their credit cards than they pay on the bill each month, the government is spending and adding to the debt more than it is paying on it. By about a trillion dollars a year. And just like those people with their credit cards, it doesn’t make it any easier when you have to pay all of that interest, which in the government’s case is over $1 billion per day.

Of course, we all know that government doesn’t actually pay anything on the debt. Taxpayers do. And right now they’re also paying a lot of interest. In fact, 40 cents of every dollar of individual income taxes collected goes just to pay interest. And it doesn’t appear that the government is being overly frugal with the 60 cents that’s left over, either.

We also know that we aren’t going to be able to pay off this debt. We are going to hand it over to our children and grandchildren. In 10 years it ought to be up around $22 trillion.
If we don’t add anymore spending. And if nobody else loses their job.

Thomas Jefferson had some excellent advice years ago when he said that “It is incumbent on every generation to pay its own debts as it goes.” Sounds like a good idea to me all year, not just at Christmas.

And if you want to get the kids a little something extra this year, slip a bill in each of their stockings for $39,118.00. That’s each ones share of the federal debt. And be sure to remind them that just like the socks and underwear, it’s gonna be even bigger next year.

Merry Christmas.

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