The Ignorant Investor

President Bush gave his state of the union speech last night, and in talking about the necessity of making his tax cuts permanent, he said:

And our economy grows when Americans have more of their own money to spend, save and invest. In the last five years, the tax relief you passed has left $880 billion in the hands of American workers, investors, small businesses and families.

The part he left off was this: "and instead replaced it with hundreds of billions of dollars in debt to Asian bankers, a sum which you are all going to have to give back to them, with interest, over the next 10, 20, 30 years."

Here's my worry. The fact that we're addicted to foreign oil seemed to surprise him, because he announced that as though it was something the rest of us didn't already know. He could have made the same pronouncement at any time over the past five years, but he didn't. What better explanation for this statement is there than the possbility that he only just noticed this stunningly obvious fact? And if he was so clueless until now about the role foreign oil plays in our economy, what other well known facts could he have missed in his education and work experience?

Take the concept of government debt. Although he talks about lowering the deficit, he never actually manages to do it. Everyone knows that to balance a budget you either raises taxes or cut total spending. Yet he never makes any concrete effort to do either. So what the hell is going on with the man?

This question puzzled me for a while. And then the answer hit me: Because he does not know that you have to do more than just say you are going to balance the budget. Or that you can't just keep borrowing money to cover a loss of revenues. Apparently he never learned that you don't get to "keep" money that you've borrowed. That a debt is something you count against your assets on the books. See, maybe down in the world of Texas business he used to inhabit, a powerful man doesn't ever have to pay back the money he's borrowed for his business. Or maybe he thinks that after people borrow money, they can just declare bankruptcy and look for a new venture to run into the ground without ever giving the funds back. Would that be an unreasonable assumption given his record as a businessman down in Texas?

Someone has to tell him- right now, if possible- that the country can't just go bankrupt and move onto a new job that it's Dad has arranged with a few old family cronies. I'm sure he'd stop borrowing so much money and talking up his tax cuts if only he knew.