Radio Script #1294

Little Talks on Common Things
December 27, 1981

During its thirty-three years this program has been devoted to Maine’s past, but we have not forgotten that its title is “Little Talks on Common Things”. So today, as the year 1981 comes to a close, I want to talk about a very common thing denoted by a simple four-letter word.

Today, four-letter words seem to be in disrepute. When we use the term, it usually refers to some word of four letters that is obscene and unlikely to be found in a respectable newspaper. But to think of four-letter words as only obscenities is most unfair. Our language is filled with hundreds of such reputable words: love and hate, good and evil, life and limb, rank and file, deaf and dumb, sink and swim, fast and slow, warm and cold. Indeed, four-letter words play a big part in
ordinary living, such as work, play, home and food.

The word I want to talk about today is also spelled with four letters: DEBT. Like death and taxes, debt seems always to be with us, recognized as an inevitable part of human existence. If we don’t owe money to someone, we are just not in the swim of modern living.

Let us first take a look at our national debt. The public media have made much of the fact that in 1981 our nation’s debt, for the first time, exceeded a trillion dollars. Within the past month, indications have come out of Washington that the single year’s debt for fiscal year 1982 may reach, for the first time in our history, a hundred billion.

Very few people have any conception of what a trillion of anything looks like. Waterville’s hydraulic engineer Bryant Hopkins used to say that he was probably the only person in Waterville who knew what a million of anything looked like. He said he could visualize definitely a million cubic feet of water. But Bryant admitted he was stumped by a billion of anything. How much more perplexed he would be today to visualize a trillion. That is a thousand billion. So let us try to put that trillion dollar debt in concrete terms we can understand. It means $4,694 for every man, woman and child in the u.s.

How long would it take to count a trillion one-dollar bills, counting at the rate of one bill a second, 24 hours a day continuously? Ask that question of your acquaintances. You will seldom get an answer exceeding a year. The correct answer is 31,636 years. If you don’t believe it, sit down with pencil and paper and figure it for yourself. It takes one minute to count 60 bills. Multiply that by 60 and you have the number counted in an hour. Then multiply by 24 and you get the number for a day. Multiply by 365 and you have the number for a year. Then divide that total into a trillion and you get the number of years needed for the full count, 31,363 years. Indeed a trillion dollars is quite beyond our ordinary imagination.

Some economists insist that we can keep on borrowing indefinitely. But if we did that, we would sometime reach the point when interest on the national debt exceeded the gross national product. That would surely be bankruptcy.

One reason why a spending increase is hard to curb, is that every year the government spends funds previously authorized, but not before spent. That accounts for many billions a year, and is one of the reasons why economists are already predicting a fiscal 1982 deficit of from 80 to 100 million dollars.

Now let us consider the debt of our State of Maine. On June 30, 1981, the total bond indebtedness, incurred directly by the State, and payable from the state treasury was $260 million. But the state was ultimately responsible for twice as much in bonded debt created by five state agencies for a total of $525 million. That brought the complete total last June to $785 million. But at that time $150 million more had been authorized, but the bonds not yet issued. Then, on November 3, 1981, the voters authorized $48 million more.

That brings that total to $983 million. We may thus confidently state that very soon Maine’s debt will exceed a billion dollars. That means a $1,000 for everyman, woman and child in the state. Some of the agencies for whose debt the state is ultimately responsible are the Maine Turnpike Authority, the Maine School Building Authority, the Maine Housing Authority and the Maine Municipal Bond Bank.

What had made the situation worse is the rising interest rates. Though they have recently fallen a bit, many economists warn us that they will soon rise again. For the authorized $48 million voted on November 3 the interest is estimated at nearly $50 million, two million more than the principal. On maturity, for the bonds out on June 30, 1981, the interest would be $95 million. On the $525 million of bond issued by the agencies, although the state is ultimately responsible, the interest is paid by the agencies themselves, but even a part of that money comes from state appropriations to those agencies.

Much of the huge agency debt has been a product of recent legislation. The Maine Housing Authority was created only 12 years ago in 1969. Its debt on June 30, 1981 was $258 million. We had no Municipal Bond Bank until nine years ago in 1972. Its debt is now $200 million. The Health and Higher Education Facility came into existence in 1974. Its debt is $66 million. Those three agencies alone account for more than half of the state’s billion dollar debt.

If our present state debt continues to rise, we will be in trouble long before the Federal Government. Unlike Washington, Augusta cannot print money. We have got to stop merely talking about our increasing state debt. By our votes at the polls we must stop the increase, no matter how much it hurts.

We could go on about public debt, because in addition to the bonds issued by state and nation, our towns and cities keep getting deeper and deeper into debt. But let us now turn to what is perhaps the most important part of the story, and the basic reason why we are in this predicament.

The entire debt picture is topped by private debt, the money owed by persons, partnerships and corporations. The fundamental blame belongs not on Washington, the State House, or City Hall, but on the American people – all of us. Not only do we elect the representatives that authorize the municipal, state and federal spending, but we do the same thing all the time ourselves. As individuals we keep on practicing the same kind of deficit financing.

Year after year, the average American buys more and more and saves less and less. In the first six months of 1980 the nation’s Savings and Loan institutions suffered withdrawals of $16 billion. While some of that money was invested in money market accounts, much of it was simply spent.

Most people will agree that a mortgage on a home is a justifiable debt. Few families would ever have a home without a mortgage. But when one adds a loan for a car, a colored TV set, and a vacation trip, debt gets into a questionable area. What is still worse is the encouragement of operators of credit cards and most department stores. In some stores a person who pays cash is looked upon as a freak.

Two factors play an important part in this situation. One is the prevailing psychology of “buy now and pay later.” Today’s permissive society has instilled into young families that they would be foolish to imitate an older generation that waited until they had the money before making an important purchase. The new families today must have everything at once, no matter how high a debt that means. Marriage counselors tell us that the leading cause of our nation’s disgraceful divorce rate is mishandling of the family’s money, and especially the accumulated debts.

Since World War II we have glibly accepted this debt psychology. It is not merely government units that must change their fiscal policies, it is the American people. Like liquor, debt has become a national addiction, and we must find a cure. I said there were two factors. The second I have already alluded to, but would now especially emphasize. It rests squarely on the shoulders of commercial interests. Store after store, one mail order firm after another, urges us to buy on credit, never warning us that a day of reckoning will come later. You are not in the swim unless you carry a pocketful of credit card, from Master and Visa, down to the cards of individual merchants.

It is easier to state the problem presented by that four-letter word DEBT than it is to come up with an answer. Like all problems, it would not be a problem if it were simple. Indeed it is exceedingly complicated, and the very notion of debt has many defenders as well as accusers. I don’t pretend to know the answer. But I do know this: unless we all get truly concerned, no answer will ever be found. So, as I now say goodbye until next week, I urge all our listeners to so some serious thinking about that little word DEBT.

Year: 1981