Wednesday, March 12, 2014

Financial and Moral Deficits

Our nation's record-breaking budget deficits are in the news lately. President Obama’s recently uncloaked budget bombshell for fiscal year 2014 includes massive and unprecedented new spending increases—largely as a consequence of the pathetically misnamed Affordable Care Act—at a time when the United States of America is still struggling to recover from the worst recession in eighty years. Under President Obama’s corrupt and irresponsible administration over the past five years, which has swollen the federal bureaucracy to double its original size and scope, our nation has been digging itself into a far deeper hole of debt, and at a far more rapid pace, than at any previous point in its 240-year history. Even the dramatic rise in the national debt from $2.1 trillion to more than $10 trillion that marked the George W. Bush administration due largely to its own massive spending and federal bureaucratic growth is quickly being eclipsed by President Obama’s boundless spending extravaganza. Whereas our country gained some $8 trillion in additional debt burden during eight years of President Bush, we have accumulated nearly $7 trillion more on top of that during just five years of President Obama. As a result, our national debt figure now stands at $17.3 trillion and counting. Unfortunately, President Obama and his loyal cronies on both sides of the aisle have abandoned all pretense of concern for rescuing our country from this inconceivable debt nightmare, with the concept of a balanced budget appearing less likely and more laughable with each passing day. If President Obama’s proposed budgetary scheme were to pass Congressional muster, gigantic spending hikes would push our national debt well above the $20 trillion mark before the final three years of his administration are up.

It is shocking to think that just thirty-three years ago when President Ronald Reagan took office, our entire national debt was "only" around $900 billion. It’s even more disturbing to realize that the federal budget deficit projected for this coming fiscal year alone eclipses our nation's total debt figure for the year 2000. Clearly, our dishonest and corrupt reigning establishment politicians in Washington have lost all sense of fiscal discipline and responsibility for the financial health of our country as they unscrupulously sacrifice control of our national financial system to the insatiable appetites of major corporate interests, thereby loading a colossal and unsustainable burden of debt onto the shoulders of future generations of average hardworking Americans and guaranteeing that American prosperity will soon be a thing of the past.

But while we must be concerned about these gargantuan runaway financial deficits and their long-term impact on our economy, we tend to forget that our country is simultaneously experiencing a more serious kind of deficit—that is, a moral deficit. These two kinds of deficits, moral and fiscal, are closely related. Our nation’s financial and economic decline over time has directly resulted from and closely paralleled its moral decline. The profound and clearly evident moral deficit in our nation's leadership and in its citizens must first be acknowledged and duly addressed if we are to have any hope of effectively halting and reversing the national debt—not to mention getting our economy on a sound footing.

Morality involves a sense of responsibility towards God and our neighbor. Religion helps to foster and inculcate this sense of responsibility. Our Founding Fathers and early national leaders were religious and moral men, and under their wise and competent administration, our country's debt incurred by the War of Independence was paid off in a timely fashion and the national debt kept very low thereafter. The Founders and their immediate successors exhibited a healthy fear of even the smallest outstanding debt. Benjamin Franklin encapsulated this early fiscal conservatism in his famous line, "It is better to go to bed supperless than to wake up in debt." President Andrew Jackson paid off the national debt down to zero in 1835. Unfortunately, in more recent times, the religious and moral character of our nation's leaders has tended to decline, with a decreased sense of responsibility to the people they govern, and the result has been a corresponding increase in the national debt. During the last century, America's outstanding debt rose from less than $1 billion in 1900 to more than $2 trillion in 2000. From the 1980s onward, the debt began to rise at a noticeably faster pace. In the last fourteen years it has grown exponentially, dwarfing the entire national debt of America’s previous 200 years combined, reflecting an increasing loss of any sense of responsibility on the part of our most recent national leaders.

What is debt? Debt is something that we owe someone else. When we get a loan or a credit card, a bank gives us a certain sum of money to borrow. Along with the right to borrow money comes the responsibility to use this money honestly and to repay it as soon as possible. When a creditor lends us money, he gives us the right to use it and expects us to pay it back in a timely fashion. Thus a financial debt is a moral responsibility towards our neighbor, because the money we are borrowing belongs to him. When we repay our debts, we are acting honestly and responsibly in accordance with the moral law.

In the world of finance, we have a responsibility to only borrow a sum of money that we reasonably expect to be able to repay and to avoid deliberately accumulating unsustainable debt. Sometimes, through no fault of our own, we may become indebted to someone and be unable to repay what we owe. In this case, it is an act of mercy and a moral thing for our creditor to voluntarily practice debt forgiveness. When he does this, he is saying that the money he lent us is now ours to keep, and we need not worry about paying it back. In the Bible, Jesus urges creditors to practice this form of forgiveness, and not to demand repayment when this is impossible.

Similarly, in the realm of morality, we are given the right to make free choices, and along with this freedom comes the responsibility to act in accord with the moral law. When we abuse our freedom by committing sin, we incur a moral debt towards God and towards our neighbor. We can pay off such a debt by repenting of our sin and making reparation for it by prayer, fasting, and works of charity. Nonetheless, it is a fact of fallen human nature that most of us are walking around with some level of debt to God due to our sins. However, God is merciful and has made an arrangement known as Purgatory to take care of any remaining moral debt we may owe Him at the time of our death. Jesus himself connected the moral debts we owe to God with the moral debts owed to us by our neighbor in the Our Father, which in St. Mark's gospel reads, "Forgive us our debts as we forgive our debtors."

Now, in the financial world, there is (or ought to be) a difference between an honest, responsible person who accidentally falls into a situation of unsustainable debt through no fault of his own, and a dishonest, irresponsible person who runs up many debts and wishes to continue running them up with no intention of ever repaying them. In the first case, mercy (financial assistance) is appropriate; in the second case, there can be only justice (collection agencies). In the moral life, there is a similar distinction between a person who sins and then repents and makes restitution for his sin, and a person who sins freely and wishes to continue sinning with no intention of ever repenting. In the first case, God is merciful and bestows a heavenly reward; in the second, He is just and metes out the punishment of Hell. Just as it is the fiscally irresponsible person’s own fault that he loses his credit card and whatever he purchased with it and must pay what he owes with extra penalties and interest, it is the morally irresponsible person’s own fault that he ends up in Hell for all eternity.

Beneath the economic and financial collapse of 2008 that led to the current recession lay a crisis of personal moral responsibility. It’s easy and partly correct to blame irresponsible lending policies of the banks or unwise housing policies of the federal government for this disaster, but the fact is that all of us Americans contributed to this national financial crisis by our immoral individual personal decisions which helped drive the preceding artificial boom. We chose to borrow irresponsibly, to spend more and save less, to live beyond our means, to take on more and more debt, to buy that nice house and new car and all kinds of gadgets we wanted but really couldn’t afford. In other words, we chose to live dishonestly because we were selfish, greedy, materialistic and corrupt. And these immoral personal decisions of ours contributed to the ballooning growth of our national debt during the Bush administration. As Pope Benedict XVI eloquently demonstrated in his great social encyclical Caritas in Veritate (Charity in Truth), you cannot build a sustainable economy on immorality and selfishness. Fidelity to the moral law on the part of everyone involved, i.e., personal moral responsibility, is a prerequisite for a sound economic and financial system.

The word "deficit" comes from the Latin word deficere, which means "emptiness." Benedict XVI pointed out in Caritas in Veritate that financial deficits and moral deficits go hand in hand. When individuals in a society succumb to a loss of personal moral responsibility, one of the natural consequences is a loss of fiscal responsibility that negatively impacts the whole society. Our skyrocketing fourteen-figure national debt with its twelve zeroes is merely a symbol and a symptom of the yawning moral emptiness of our nation’s leaders and citizens in recent years. Without a general and profound moral reform of American society beginning with each individual American, no financial reform project will succeed or bear lasting fruit. Only through a timely return and re-commitment to personal moral responsibility—aided by devout religious faith and the wisdom and example of the Founders—on the part of America’s citizens and leaders alike can our nation yet hope to pull away from the giant black hole of financial self-destruction toward which it is now hurtling at breakneck speed.

Copyright © 2014 Justin D. Soutar. All rights reserved.

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