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Member Questions of the Week of May 17, 2010

Jareb Baer of Lake Park, MN asks: “Assuming we stop deficit spending today, how long do you think it would take to pay off the national debt? OUR ANSWER: According to Heritage budget analyst Brian Riedl, there’s no way to know for sure. That’s because, to pay off the national debt, the federal government would have to do more than run a balanced budget — it would have to run a surplus. The size of the surplus would then determine how quickly Congress could pay off the debt. In other words, our men and women in Congress would have to do more than stop deficit spending; they’d have to actually cut spending. The more they cut, the faster they could pay off the debt. In reality, though, Congress will likely not run budget surpluses. Given that, a balanced budget’s our best bet: It would keep national debt at a level amount and – with a rise in GDP – decrease the size of the debt in relation to GDP. At that point, the interest could more easily be paid. For more information about the national debt – and to clear up some common misconceptions – check out this video.

Donald Edwards of Orlando, FL asks: “Could you explain exactly how the situation in Greece has come about and why Americans should be concerned?” OUR ANSWER: Basically, the Greek government brought itself to the brink of bankruptcy with irresponsible fiscal policies and a long history of bad economic policies. Heritage expert Terry Miller explains how: (1) It made too many promises it couldn’t keep, from wage concessions to overly generous pensions and (2) It borrowed more and more to sustain those promises until the markets became unwilling to continue to underwrite such an unaffordable standard of living. To make matters worse, the Greek economy, often weak, is now fated to contract materially, and Greece, as part of the Eurozone, can’t turn to exchange rate changes for relief. To buy Greece time to enact the necessary and radical policy corrections, the European Union and the IMF agreed to make up to 100 billion available to Greece to finance itself through the transition period — but only if Greece agreed to make certain policy changes and reduce its budget deficit by an amount equal to about 10 percent of its economy. Americans should be concerned for several reasons. First, the troubles in Greece represent an early warning of what faces many other countries in Europe. A broader European sovereign debt crisis was recently averted, but perhaps only temporarily. Another such financial crisis could seriously weaken the European economy, which would have negative consequences for the U.S. economy and U.S. financial markets. Finally, and most importantly, the U.S. could find itself in a similar situation, as this blog post by Patrick Tyrell, research coordinator for the Center for Data Analysis, makes clear. Greece’s debt-to-GDP ratio stands at 133 percent this year. According to the Obama administration’s planned budget, our own gross national debt will reach nearly 90 percent of GDP in just 10 years, while our long-term unfunded obligations from programs like Social Security, Medicare and Medicaid are roughly 10 times the size of our economy.

Francis Jaworski of Saipan, CNMI asks: “What is good fundamental reading material for building a good conservative foundation? OUR ANSWER: You might start where Heritage president Ed Feulner did. As an undergraduate at Regis College in Denver, he read God and Man at Yale by William F. Buckley Jr., The Conservative Mind by Russell Kirk and Conscience of a Conservative by Barry Goldwater. Buckley and Kirk, in particular, so impressed him that, when he compiled his own anthology of “modern classics of conservative thought,” he devoted the first two chapters of it to essays they wrote. That anthology – The March of Freedom – is itself an ideal primer in conservatism, as well.

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