State of the Union – Debt

During tonight’s State of the Union speech, President Obama plans to focus on an agenda to create jobs, or so I’ve heard.  We will likely hear him use the word “invest” a lot tonight.  In the past we have heard how we need to “invest” in green energy, “invest” in education, “invest” in economic growth, “invest” in jobs.  Invest is a liberal code word for “spend”.

Investing is when you use your money to purchase something you believe will return more money than the original purchase price through interest, dividends and the final sale price.  Investing should only be done after carefully considering the risks and alternatives and understanding the expected return.

Spending, on the other hand, is when you use your money to purchase something you need or want without considering the future value.  For example, if you want a new car you SPEND money on it, you don’t INVEST money into it because we all know that the car will decline in value over time.

Both investing and spending are normal activities; there is nothing wrong with either.  The problem comes in when the Government knows the people aren’t open to spending more money, so they need to change the terminology.  We aren’t spending money on yet another stimulus or bailout, no; we are investing money in a jobs program.

Mr. President, before you “invest” any more of our money I would like to see a prospectus and return on investment (ROI) study that shows us what the payoff is going to be.  Your last investment didn’t produce the returns you promised.  Remember the stimulus bill we needed to pass to prevent unemployment from reaching 8%?  It didn’t work.  We are over $14,000,000,000,000 in debt and the official unemployment is at 9.4% (down from a high of 10.1% in October of 2009).  The U6 unemployment rate (or “real” rate) is 16.7% (down from a high of 17.1% in September of 2010) – see http://portalseven.com/employment/unemployment_rate_u6.jsp.

That $14 trillion dollar debt works out to about $45,000 per U.S. citizen.  The median household income in the U.S. according to the 2005 census was $44,389.  Think about that – $45,000 of debt per CITIZEN but only $44,389 of income per HOUSEHOLD.  At the current spending rates our debt jumps to $22 trillion / $68,000 per U.S. citizen in just four years (see http://www.usdebtclock.org).  That is a bad investment.

If you really want to invest in our future we need to reduce our debt by slashing, not cutting, our spending.  That was the message the voters sent you last November Mr. President.  Are you with us?