In Shakespeare’s play, Hamlet, Polonius counsels his hotheaded son, Laertes: “Neither a borrow nor a lender be, for loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.” (In this context, “husbandry” means careful or thrifty management; frugality, or thrift.)
It’s interesting to note that “in the days when Hamlet was first staged (around 1600), borrowing was epidemic among the gentry, who sometimes neglected husbandry to the point where they were selling off their estates piece by piece to maintain an ostentatious lifestyle in London.” (Shakespeare Quotes, enotes.com).
So, here we are, more than 400 years later, dealing with the same issue in America — that is, excessive borrowing. When it comes to husbandry, it’s pretty obvious that little has changed. We have a profligate government and a spendthrift society, with growing numbers of people, businesses and government entities going broke.
Several recent articles illustrate the situation:
A recent Wall Street Journal article about the state of New Jersey noted, “In 1990 the state was $3 billion in debt. Borrowing has since grown at a compound annual rate of about 13 percent, and now the state is $32 billion in the red. Throw in unfunded pensions and health benefits for retirees, and that number swells to $113 billion, or $3,400 for every man, woman and child in the state. That’s three times per capita higher than the national average, making New Jersey the nation’s fourth-most indebted state.” Click here for the Feb. 23 Wall Street Journal article.
In California last Aug. 27, during Senate floor debate on the day the state budget was sent to Gov. Arnold Schwarzenegger, state Sen. Tom McClintock, R-Thousand Oaks, said, “Today we set in motion events that will require far more difficult and painful decisions starting just five months from now in what is likely to be a much worse economy. I am afraid that with this vote, for the second time in a decade, this state is being driven to another Gray Davis-sized fiscal crisis that this vote makes inevitable for exactly the same reasons: Lack of restraint in good times combined with a lack of discipline in bad times.” (Note: California’s proposed 2008-09 fiscal year budget was recently reported to be $16 billion in the red.)
On the municipal level, the city of Vallejo is on the verge of filing bankruptcy, the first city in California to do so. The city of San Diego has approximately $1.9 billion in unfunded liability for its employee pension plan; Santa Barbara County has an estimated $200 million unfunded obligation for its employee retirement program; and the cities of Santa Barbara and Solvang have both been reported to be using reserves to pay current operating costs.
Commenting on federal debt, Terrence Jeffrey observed, “Thanks to the compounded negligence of four successive generations of politicians in Washington, D.C., however, every family in America is now on the hook for $455,000 over and above what they owe on their own mortgage, or student loans, or credit cards, or can expect to pay in taxes under the current tax system.” (“Your generous $455,000 loan to Uncle Sam,” Feb. 27 Conservative Chronicle, Subscription required.)
The proposed 2008-09 federal budget of approximately $3 trillion amounts to around $10,000 for every man, woman and child in America, 300-million strong. In addition to the annual budgets that presumably are funded with the money the federal government extracts from taxpayers, there is also the nation’s little recognized obligation of some $9 trillion that our esteemed political leaders have incurred without voters’ consent.
Until his resignation earlier this month, then-Controller General David M. Walker had been speaking around the country for more than two years, delivering the message that the United States is rapidly going bankrupt. Walker believes we have only about 10 years before that happens. But, even with the head of the Government Accountability Office (GAO) openly warning everyone who will listen, no one is paying attention.
Everywhere we look throughout the nation, we see people, businesses and government entities that are upside down financially, seemingly with no way out other than bankruptcy. But, so far, that doesn’t seem to be slowing anyone down — individuals and politicians alike — in their race to the poorhouse.
What happens when we get there, you may wonder?
It won’t be pretty.
Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who has lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his own blog, Opinionfest.com.