Marc Cuniberti: Deficits matter |

Marc Cuniberti: Deficits matter

It is no secret the U.S. government has amassed a lot of debt. Many people don’t give government debt much thought and indeed, some believe the government can just spend money on whatever it sees fit and the world will be better for it.

Thankfully, most politicians from both sides of the aisle realize, at least to some degree, that unbridled government spending is not ideal. History dictates an over-spending government will eventually run the balance sheet into the rocky shoals of a national debt crisis.

The consequences of that, albeit a rare occurrence, can be very severe, and the event affects almost every income level.

Government debt, like all debt, has to be paid back at some point. The idea that “deficits don’t matter” has been bantered about the political aisles from time to time, but deficits do matter in my house, and probably in yours as well. Public debt is no different, although some would like to think so.

Although the U.S. government has been running up deficits for years, the last two decades has seen an unprecedented acceleration. Y2K, 9/11, the blowup, and the 2008 real estate and banking implosion (among other events) were all deemed critical enough to warrant even more borrowing to address each crisis.

Because of COVID-19, the last 12 months have witnessed even more government spending and have dwarfed all other previous events.

Although spending does not necessarily imply debt accumulation, in the case of the U.S. government, most of the spending has been accomplished by fiat money creation (money printing), or by tapping the global credit markets, both of which just rack up more debt.

Considering it took about 200 years to amass the first trillion in government debt, total U.S. debt has now ballooned to 23 trillion in a few short decades. The last 12 months alone has seen about 6.8 trillion in new debt. This does not include the proposed two billion in infrastructure repair currently on the table from the Biden administration and billions more for ongoing assistance to the credit markets supporting U.S. financial and business institutions.

Keeping those figures in mind, an easy argument could be made that the path we find ourselves on is unsustainable. Debt cannot be accumulated ad infinitum.

Since debt is future income brought forward and spent today, debt can only be repaid essentially by working for no pay sometime in the future, for what is earned only goes to paying back what was borrowed previously.

With 23 trillion in debt and climbing, the amount is so large, those paying most of the bill will likely not be the ones who borrowed it (us).

This means, unless the U.S. adopts the attitude that deficits do indeed matter, it will be our children (and their children) that will suffer the eventual consequences of our borrowing.

Some argue the spending is necessary to solve current crises and make a better future for future generations.

An easy argument to be made by those doing the borrowing.

In fact, it is so easy, borrowing has obviously been a commonplace solution for decades.

As to the actual consequences, many believe U.S. debt can be just wiped clean in some sort of jubilee event (see debt jubilee- Wikipedia).

If this is true, one could argue we should spend as much as possible and as fast as we can to fix all the ills in the world.

However, something (hopefully) in your brain tells you there is something amiss with this conclusion.

No matter what the reader believes, debt and deficits do matter.

History tells us without exception, debt cannot just be wiped clean, and that the more debt that is accumulated, the more difficult the payback will be.

It is argued that the money spent during the creation of all this debt has been necessary, whether it be for social improvements or crisis mitigation.

Whatever one believes, the burden we are leaving to future generations is real, is massive and is getting worse by the day.

If it’s our children’s money we are spending, and it is, might it be better left for them to decide what’s necessary at that time and for us to stop the borrowing?

Should we instead limit our own spending to what money we do have?

And if we don’t have enough for our current needs, to work harder and earn it ourselves?

Moreover, if the powers at be cannot make due with the trillions they already have, perhaps we should somebody in there that can?

These difficult questions must be answered at some point. Either that or we continue to nail future generations to the cross of our gross economic mismanagement.

Marc Cuniberti holds a B.A in Economics with honor from San Diego State University and is the hose of Money Matters carried on 66 stations nationwide. California Insurance LIc# 0L34249. Call him at 530-559-1214 or visit


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