Thursday, March 12, 2009

Bobcast: Spending for the future

Latest Bobcast is up. Listen here or read below.

A talking point against rising federal government spending is picking up steam in conservative circles.

Former House Speaker Newt Gingrich sums up the thinking, saying increased federal spending "means our children and our grandchildren for a very long time are going to pay off for the politicians of this generation who have refused to solve problems and just keep borrowing more and more money."

A favored expression is these plans will “mortgage the future” of ensuing generations.

Granted, a lot is going out the door in the form of the $787 billion economic stimulus package, the $700 billion financial system bailout and the $400 billion spending bill recently signed by President Obama (behind closed doors, we’ll add). And there’s more to come if one looks closely at Obama proposed $3.5 trillion budget for next year.

Lost in this is the notion that Americans, in their own budgets, are familiar with mortgaged futures. Millions – 50 million by several estimates – are paying a home mortgage.

Said another way those American homeowners borrowed money for a roof over their heads that they hope to pay off over time. In this sense, a home loan is a promise toward the future, a vow that the borrower’s economic circumstances will improve over time or at the very least won’t go down. We all benefit from this promise as money circu-lates through the nation’s $14 trillion economy.

No guarantees though. Economists tell us 1-in-5 mortgage holders are in the fore-closure process, a key cause for our economic meltdown.

Government spending to keep Americans working again is indeed a mortgage on our future, as the critics say. The world’s most vibrant economy is making an investment, borrowing money it believes can be repaid in better days.