Although the economy is booming, I am concerned that most of the public is not aware of the current debt situation.
After the 2008 crash of the housing industry, which was brought about by banks and other lenders providing loans to individuals with little or poor credit, it appears that we are headed toward another financial crisis.
For the most part, the media has paid little or no attention to this reality and neither does the public appear either to know or to care about it. In August of 2017, a report from the Federal Reserve stated that Americans had $1,021 trillion in outstanding credit card debt as of June of that year. This total exceeded the credit card debt of 2008.
This time the lenders, instead of providing high-risk housing loans, have given many consumers with subprime or below average credit scores access to credit cards. Did we learn any lessons?
It is estimated that only one third of credit card holders pay off all of the prior month’s charges, so it is obvious why this situation exists. In Maine, the average balance per household in credit card debt is in excess of $7,500.
Where do you fit?
Hopefully, you are not in the two-thirds of debtors that pay off only the minimum or less.
Another concern is student debt, which has reached a historic level.
The total today is $1.3 trillion and now exceeds the total of credit card debt. A serious problem with this category of debt is that defaults on student loans are higher than most of the other types of loans.
I hope that by bringing these facts to your attention, you will become aware and active in your community in focusing discussion on the debt levels in local, state and the national level.
In regard to the federal budget deficit, far too many individuals simply fail to understand how this can and will affect their future. We can start a review of the rise in our federal deficit with President Reagan, who almost doubled the deficit by accumulating over $1.4 trillion of debt.
However, the largest increase in the deficit took place when President Obama came close to doubling the debt from $10 trillion to just under $20 trillion.
The current Republican-led House of Representatives seems to understand the need to attempt to balance the budget. Unfortunately, with the lack of fiscal responsibility by weak-kneed Republicans and big government liberal Democrats in the U. S. Senate, the debt will increase again by over $1 trillion in the next 10 years.
It is my belief that neither Sen. McConnell, who has been in the Senate since 1985, nor Sen. Schumer, who has been in either the House or Senate for 38 years, has the commitment or judgment to pass a balanced budget. When you consider that neither of these men has ever held a private sector job after their college years, it is understandable that they propose increased spending with little or no regard for fiscal responsibility.
I find it interesting that the states of Virginia and Maryland, which surround D.C., are two of the top three contiguous states with the highest levels of household credit card debt — with both states in excess of $10,000 of debt per person. There seems to be something about the atmosphere in this area that encourages unrealistic levels of accumulating debt.
It is important to note that the current federal discretionary spending accounts for only about one-third of the federal budget with the other two-thirds being spent on Social Security, Medicare and Medicaid. Without major revisions in these entitlement programs, they are unsustainable.
No government at any time has ever spent its way into prosperity. If the leadership of both political parties does not soon come to realize and act responsibly with this situation, our country, like all others before it, will plunge into disaster.
I encourage all who read this to press your legislators, either Democrat, Republican or independent, to come to grips with this situation and support a balanced budget now. If they pay no heed, it will only be a matter of time before the financial collapse of our nation will take place.
Another View is a weekly column written collaboratively by Dale Landrith of Camden, Ken Frederic of Bristol, Paul Ackerman of Martinsville and Jan Dolcater of Rockport.
Send questions/comments to the editors.
