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'Curious' About Consequences Of Federal Debt

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Milan Lucic: Hard Hits

'Curious' About Consequences Of Federal DebtWBZ

Billions, Trillions. The amounts of money being tossed around in Washington, D.C. these days are nothing short of staggering.

Nadine of Beverly is Curious where the Federal Government is getting all this money. The short answer is that the Feds can crank up the printing press when they need cash.

As the bad economic news has piled up, President Barak Obama has made it clear that he is willing to spend money the government really doesn’t have to jumpstart the economy.

In a recent speech he said, “Equally certain are the consequences of doing too little or nothing at all. That will lead to an even larger deficit, loss of jobs, and income, and confidence in our economy.”

Make no mistake; this is an unprecedented spending spree. Professor Jonathan Gruber of M.I.T wrote a book on public finance and says running a deficit is really the only option today.

“Do they matter more, for example, than the financial crisis? No. Do they matter more than the end of auto manufacturing in the U.S? Probably not.”

Historically, pumping too much cash into the economy has had negative consequences.

Joanne of Haverhill wrote on our Curiosity Web site, ‘With all the bailouts and proposed spending and tax cuts, won’t that lead to massive inflation?”

Professor Gruber believes the Federal Reserve Bank has learned from past mistakes. “We know how to turn around more quickly. So if we print a lot of money, and there starts to be inflation, we can turn that around more quickly.”

It’s hard for most of us to comprehend the real size of the deficit, and appreciate just how much money is involved here. But consider that every man, woman, and child in this country would have to contribute $37,000 to pay off the national debt.”

Prateek Kumar believes this bill is going to fall largely on his generation. The Harvard University sophomore is a grassroots organizer involved with the Concord Coalition, an organization committed to raising awareness about the national debt.

“The implication is that we risk our quality of life being lower than the quality of life of our parents, of our grandparents,” said Kumar.

He doesn’t believe this swelling debt is fair to today’s young people. “It’s another example of taxation without representation. Again, youth are being asked to pay for bills they didn’t vote for.”

Gruber says that Obama has inherited a very difficult position, however. But how the new president handles his first crisis will impact this country for generations. “I think the key for Obama is not to be too short term in his vision.”

This won’t be the only fiscal challenge for the new president, according to Gruber. He says that dealing with entitlements, particularly Medicare and Social Security, as the population ages will put tremendous stress on the budget.

Right now the Federal Debt stands at about $10.6 trillion.

© MMX, CBS Broadcasting Inc. All Rights Reserved.

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