Government Is Far From Bankruptcy

Robert Scheer suggests that George W. Bush has a plan “to bankrupt the national government” (“Bush Binds Us Into a Fiscal Straitjacket,” Commentary, Aug. 28). While I share his animosity toward Bush, it’s wrong to misuse the word “bankruptcy.” Sounding the alarm in this way simply reinforces the conservative tilt of the government.

The federal government is far, far from bankruptcy. In fact, it is much further now than in 1992 because of the Clinton-era paying down of government debt, along with economic growth. This can be seen when we consider the growth of its debt relative to that of its ability to collect taxes (roughly measured by changes in gross domestic product). The government’s debt has fallen from roughly 50% of GDP that year to about 35% now.

The U.S. government will go bankrupt only when it cannot pay the interest on its outstanding debt. In these terms, it should be obvious that the United States, the most powerful nation in the world, is nowhere near the situation of Argentina or Russia.

An outstanding government debt can be good for the economy since, by and large, government debt represents an asset to the public, allowing us to keep our savings in an extremely safe form. The public’s holding of government bonds helped prevent a severe recession at the end of World War II. Instead of worrying about the government’s debt, we should be concerned with the excessive indebtedness of private individuals and corporations. That’s the sector most likely to go bankrupt.

James Devine

Professor of Economics

Loyola Marymount University

*

The zany and estimable Scheer is at it again with bloated hyperbole. He writes that “Texas politicians, including three presidents in the past 40 years, always make sure their companies are fed well at the Washington trough, even if it means going to war.” So I assume Lyndon Johnson did Vietnam for Texas oil companies or defense contractors. The advice of what LBJ called the “wise men” played no role.

And I assume the prior Bush launched the Gulf War for Texas oil companies and defense contractors. Vital national interests played no role.

William S. Davis

Yorba Linda

*

Scheer gets it right in pointing out the president’s pleasure in seeing the possibility of a deficit in the federal budget. For at least 20 years, the Republican Party has set as its main goal to “starve the beast.”

The beast, of course, is government, since that is always the problem and never a solution. Where Scheer gets it wrong is saying that Social Security is “the one domestic government program that really works.” There are plenty of domestic government programs that work quite well. It is good for Americans to be skeptical about the role of government, but we should not allow that to blind us to the many good things we accomplish by working together through government.

James Freed

Santa Monica

*

George W. must be doing a good job, as Scheer’s socialist rants get more and more hysterical.

Rich Decker

Los Angeles