the New Congress Reverse Our Nation's Fiscal Irresponsibility and
Halt the Coming Crisis?
mid-term elections created a new Congressional lineup, one that
will inherit some big problems—and the ballooning national
debt tops the list. Senator Harry Reid has said it's a major concern
for him, but will the new Congress really do anything about it?
NJ —There's a new Congress in town, and they've got
their work cut out for them. Along with an out-of-control war, they'll
inherit a national debt that is forever increasing, due to the manic
spending that has become the norm in American politics. If you're
worried that America's debt is so out of hand we'll never be able
to rein it back in, you're not alone. Authors Addison Wiggin and
Bill Bonner say that if the current Congress doesn't make decreasing
the national debt a top priority, future economic catastrophe is
a virtual certainty.
no secret that government spending has gotten way out of control,"
says Wiggin, who along with Bonner, co-authored Empire of Debt:
The Rise of an Epic Financial Crisis (Wiley, 2006, ISBN: 0-471-73902-2,
$27.95). "The Iraq war alone is putting such a significant
strain on the national debt that something has to be done. But will
something be done or will it all just be politics as usual? Only
time will tell."
Wiggin and Bonner received a letter last December from Nevada Senator
Harry Reid, now the soon-to-be Senate Majority Leader. In the letter—which
acknowledged Empire of Debt's message—Senator Reid says that
he finds the national debt "extremely troubling" and expresses
an intent to do something about it.
the letter Senator Reid seems to have a strong concern for the growing
debt and what it means for the American people," says Bonner.
"We hope as Senate Majority Leader he will be able to influence
his colleagues to be as concerned as he is and to encourage them
to come up with legislation that will help us get a handle on the
national debt. In fact, we challenge him to do so."
In the letter Sen. Harry Reid wrote:
I agree with you that our debt is extremely troubling, and
I am disturbed that some in Washington seem to regard the debt
as a mere inconvenience rather than the actual threat it represents.
Over the last four years, the country has experienced the worst
fiscal reversal in history, which is not a temporary deficit due
to the economic slowdown or the costs of the war on terrorism.
Instead, the $5.6 trillion 10-year surplus the President inherited
is now a deficit of $2.8 trillion, creating a total fiscal reversal
of almost $8.4 trillion. That amounts to over $25,000 of debt
for every man, woman, and child in the United States and threatens
to leave our children and grandchildren in debt for a generation.
This massive debt will have a serious and damaging effect on our
budget surpluses that we achieved in the late 1990s and early
2000 resulted from a strong economy and some hard choices by President
Clinton and Congress. I supported these budgets, but I have been
unable to support the recent budgets, awash in red ink. These
deals have eroded our country's surplus and its economic security.
Please be assured that I take this issue very seriously and will
continue to fight for a renewed commitment to fiscal responsibility.
"Based on this letter, he clearly wants to do something about
the national debt," says Bonner. "But, all political posturing
aside, the challenge will be overcoming the natural love of spending
that seems to plague most political leaders. Each member of the
new Congress must set a personal standard to create and support
only fiscally responsible legislation."
Bonner—colleagues at Agora Financial, one of the world's largest
financial newsletter companies—want the incoming Congress
to open their collective eyes. Here are a few of the sobering points
they make in their book and their newsletter, The Daily Reckoning:
The 2007 Defense Department budget will cost us $439.3 billion,
or 7 percent more than this year. This does not include spending
for wars in Iraq and Afghanistan, which could add another $120 billion
in 2006. (Americans so far pay about $46 million per Al Qaeda operative
The renowned Levy Institute estimates that the United States will
owe foreigners $8 trillion by 2008—a breathtaking 60 percent
of our gross domestic product. Think about it: If we were trying
to settle up on that debt, $6 out of every $10 that we earn in America
has already been spent.
Our trade deficit with China alone was $201 billion in 2005—a
24 percent increase over the $162 billion in 2004. And that alarming
imbalance includes nearly $4 billion that American executives are
pumping into Chinese business ventures as foreign direct investments.
At home, three million American manufacturing jobs have vanished
since mid-2000—exported to subsistence-wage dragons such as
China. It's no wonder. In Jan.-Nov. 2005, Americans bought $185.3
billion worth of stuff from China—surpassing by 14.4 percent
the $162 billion we spent during the entire year of 2004.
Today, the average American household has $8,000 in credit card
debt. And for every $19 Americans earn, they spend $20.
The dollar must maintain a reasonable value or lenders will be unwilling
to lend. Dollar loans must also pay a reasonable amount of interest.
With $36 trillion in loans outstanding, even at 5 percent interest,
that represents annual debt service payments of $1.8 trillion. Who's
got that kind of money? Not Americans; they're already spending
statistics could go on forever. America's current way of life, financed
by a swelling ocean of debt, simply can't. And that's the point
that Wiggin and Bonner want Congress to grasp. In their book they
assert that the United States is now an empire—a trend that
actually began more than a hundred years ago—and all empires
come to an end. History proves it. And while there is no way to
know for sure where in the cycle we are, the authors believe we
are much closer to the end than to the beginning.
Bonner believe that what will shatter America's confidence is a
series of financial crises. They theorize that house prices will
stop rising, which will cause a cutback in consumer spending, which
will send the U.S. economy into severe recession. Individuals who
are forewarned can be forearmed, but the authors see little hope
that the mass of "imperial citizens" will reverse the
self-destructive road they're hurtling down.
dealing with an administration that doesn't think twice about spending
billions of dollars we don't have," says Wiggin. "It is
going to take everyone working together in this new Congress to
put a stop to all of this superfluous spending. My hope is that
Sen. Reid and like-minded members of Congress will lead the way
in the fight to save the U.S. from a financial collapse. It's time
for Congress to put their money where their mouth is—and I
hope for all of our sakes that they will."
Wiggin is the editorial director and publisher of Agora Financial,
a multimillion-dollar financial research and publishing group based
in Baltimore, Maryland. His e-newsletter, The Daily Reckoning, has
attracted more than 500,000 readers in the United States and Great
Britain, has been translated into French, German, and Spanish, and
has been popularized by such mainstream publications as Money and
Marketwatch.com. Wiggin has been featured as an expert in such publications
as The New York Times Magazine, Worth, The MotleyFool.com, The Street.com
has been a student, writer, and commentator of financial markets
and governments for more than a decade. With a master's degree in
philosophy from St. John's College and experience working with the
Cato Institute in Washington, D.C., Mr. Wiggin has acquired both
a macroeconomic and contrarian's outlook on domestic and international
is the founder and president of Agora Publishing, one of the world's
most successful consumer newsletter publishing companies, and the
author of the free daily e-mail The Daily Reckoning.
passion for international travel and big ideas are reflected in
the company he's successfully built. In 1979, he began publishing
International Living and Hulbert's Financial Digest. Since then,
Agora has grown to include dozens of newsletters focusing on finance,
health, and travel. Since the early 1990s, Bill Bonner has vigorously
expanded from Agora's home base in Baltimore, opening offices in
London, Paris, Bonn, Waterford, Ireland, and Johannesburg, South
publication subsidiaries include Pickering & Chatto, a prestigious
academic press in London, and Les Belles Lettres in Paris, best
known as a publisher of classical literature.
Bill Bonner is the author, with Addison Wiggin, of the New York
Times business bestseller Financial Reckoning Day: Surviving the
Soft Depression of the 21st Century (Wiley, 2003).
Debt: The Rise of an Epic Financial Crisis (Wiley, 2006, ISBN: 0-471-73902-2,
$27.95) is available at bookstores nationwide and major online booksellers.
information, please visit dailyreckoning.com.
Rocks-DeHart Public Relations