It’s the phrase all boaters dread.  The mechanic exclaims “Just another T” after diagnosing the boat’s latest problem.  If it’s a small boat, it means another thousand.  If it’s a big boat, the reference is to a hit of ten thousand.

Some boaters (the “Carefrees”) accept these “just another T” episodes as a necessary cost of getting and keeping what they want.  Others (the “Frugals”) get so upset that they soon loath their big plastic toys.  In my neck of the woods, these Frugals claim that a person doesn’t need to actually own a boat to experience the emotions of boat ownership.  All one needs to do is stand under an ice cold shower, fully clothed, and methodically tear up $100 bills.

America now struggles with a much bigger “Just another T” problem.  The Congressional Budget Office regularly confirms now that the federal government adds just another trillion to the federal debt every ten months or so.  There were no big headlines because, after all, we’re getting used to these trillion dollar debt hikes every nine to ten months.  They’ve been going on since early 2009 and, absent some huge changes, will likely continue indefinitely.

As with the boaters, there are the Carefrees, those who accept these unprecedented hikes as a necessary cost of getting what they want, and the Frugals, those who have come to loath the government money machine.  They feel as if they’re stuck under a cold shower, helplessly watching as the federal government burns through another $10 billion every day, forty percent of which is borrowed money.

Many understandably struggle to comprehend how much a trillion dollars really is.  A single trillion dollars would cover the cost of a full-ride, four-year college scholarship for all 20 million Americans between the ages of 15 and 19.  It would fund a 20 percent down payment on a $200,000 home for all 25 million Americans between the ages of 28 and 35.  And if you’re a shopper, try this one.  Assume that when Columbus landed in 1492, he went to a mall and started spending at the rate of $3,000 a minute, every minute of every day, 24-7-365. Columbus would need to keep spending at that pace for another 115 years before he hit a single trillion dollars.  As you ponder these silly comparisons, just try to comprehend the future impacts of our public debt being pumped up a trillion every ten months.

Although we’re getting used to the trillion dollar annual deficit rhetoric, it’s a very new phenomenon – completely unimaginable before 2009. The annual deficits for the thirty years prior to Bush II averaged $100 billion a year.  Bush raised the annual average to a shameful $250 billion. But, in retrospect, it all seems like peanuts compared to the $1.4 trillion annual average of the last three years.

The public debt, from the beginning of time to the end of fiscal 2008, grew to $5.8 trillion.  Give us another few months and it will have nearly doubled over a period of less than four years.  Within the next ten years, it could easily top $20 trillion.

And that inevitably leads to perhaps the direst trillion dollar risk.  On January 9, 2009, the CBO issued the following warning to Congress:

“For every $100 billion in additional federal debt, future taxpayers will probably have to pay about $5 billion a year in interest costs.”

This warning recognized that, over the long-term, the interest cost of our debt will likely equal five percent a year.  Of course, with the present artificially depressed interest environment, we are paying a much lower rate today.  But how can anyone reasonably expect that investors, both foreign and domestic, will forever buy U.S. bonds that promise a negative real return, particularly as the value of the dollar descends and more rating downgrades loom?

As the CBO has repeatedly warned, interest rate hikes pilloried Ireland, Greece and Argentina and could do the same to America.  A five percent interest cost would trigger an annual trillion dollar interest tab on a debt of $20 trillion.  It’s hard to imagine the negative cost-of-living impacts to the American people of having to shell out over a trillion dollars every twelve months just to service the interest on an escalating, out-of-control debt.

Anyone who has watched the current debt ceiling theatrics in Washington knows that, for the powerful Carefree players, the only goal is to get a bigger credit card that will allow the government to rack up trillions more of debt.  At the other end of the spectrum are the extreme Frugals, those who would shut off all future debt and sink the boat just to prevent future “just another T” problems.

What we so clearly lack is a powerful core of smart, influential players on both sides of the aisle who honestly recognize the seriousness of the situation and have the will and capacity to develop, implement and sell strategic, disciplined solutions that really promote business development and job creation and insure that, over time, our public sector returns to a sensible size relative to the private sector.  There are a few such players, but not near enough.  The existing cast of characters will never get the job done.

May 15, 2012