by Ryan Streeter on November 15, 2012. Follow Ryan on Twitter.
At Bloomberg View Kenneth Ackerman writes:
The U.S. government today owes $16.05 trillion to bondholders and creditors, more than $51,000 for every American. This debt is already larger than the country’s annual economic output and threatens to cripple the economy for generations.
In its 235-year history, only twice has the country run up this big a tab: during the Civil War and World War II. Each time, though, the U.S. managed to dig its way back, regain its credit and emerge as the world’s leading economy. Both episodes offer lessons for today’s predicament.
After a tour through the past predicaments, he concludes:
The history is clear. With four things — income, growth, discipline and patience — the U.S. has climbed out of financial holes similar to the one it now faces. Since Election Day, President Barack Obama and House Speaker John Boehner have signaled the need for a bargain: cutting some $4 trillion in debt over the next decade. That’s the very type of disciplined, long-term plan that saved the country’s finances in the past.
I would offer that “discipline” is what’s required to actually cut the $4 trillion. Saying you will make such cuts doesn’t require any discipline.
And that’s a problem for one obvious reason: the sense of urgency is greater when you are living amidst ruins or in a shaken society. Today is different than the years immediately following the Civil War and WWII. The question is whether we can muster the strength to practice the discipline required to restrain spending growth and foster economic growth. If we can’t, this will prove to be the biggest crisis period in the history of the Republic.