Last Updated Dec 24, 2009 2:00 PM EST
Well, I would hope we learned from the subprime mortgage crisis that got us into this mess that too much leverage is a bad thing. That's sort of a no-brainer, isn't it? I mean, giving people mortgages they can't afford with no money down is bad, right? Banks betting the farm on mortgage-backed securities and credit-default swaps -- also bad.
And yet, our national response to this crisis has essentially been to leverage the entire country by ratcheting up the national debt to record levels. What message does that send to each and every American business and family with a budget to manage?
Now, don't try to spin this as a partisan thing. It's not. Both parties, as well as some glaring segments of corporate America, share this dangerous spendthrift mentality. The lack of accountability and fiscal responsibility is appalling. So, while we are indeed talking about 2009, remember that the Obama administration didn't start us on this dangerous path, although it's not likely to get us off it either.
And lest we even think about blaming everyone but ourselves, many of us played a role by believing we could borrow our way to prosperity and electing officials who supported that belief. That said, if the lesson is we're not entitled to anything we don't earn, it's clear that, with respect to our leadership in Washington and on Wall Street, that lesson has most certainly fallen on deaf ears.
Here's a recap of some of the major spending stories of the past year:
- February: Congress passes $787 billion stimulus bill. At the time, the Wall Street Journal called the bill "a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years."
- March: AIG reveals that $105 billion of bailout funds were actually used to pay off so-called counterparty banks, including a combined $48 billion to Goldman Sachs, Bank of America, Merrill Lynch, France's Societe Generale, and Germany's Deutsche Bank.
- March: AIG pays retention bonuses totaling $165 million, or $1 million plus to 73 people in its financial products unit - the one that led to the company's demise. Congress is outraged until it's learned that the stimulus bill included a loophole that exempts these very bonuses. Hmm ...
- October: Goldman Sachs announces quarterly profits of $3.2 billion while setting aside $5.4 billion for compensation.
- December: Congress clears a $446 billion omnibus spending bill and an adjustment to the Treasury's borrowing authority to manage the growing national debt, expected to soon top $12 trillion. And a $626 billion defense bill is still on its way by year end.