One dollar was usually equivalent to something like fifteen hundred lira, so it was nothing to spend thirty thousand lira for dinner.
At first, tourists tended to be intimidated by these seemingly large sums. But then after a day or so it all seemed like play money, so people got slap-happy. “A million lira? Hey, no problem.”
By the time they left, they often found that they had in fact spent more, sometimes far more, than they had intended.
Today we have a situation where, in the last year, any number attached to the federal deficit has become meaningless. Ten years ago, when Bill Clinton was President, the U.S. budget was actually running a significant surplus for the first time in our lifetimes.
There was talk of surpluses far into the future. Then came Sept. 11 and war, and deficit spending resumed.
Now we are in uncharted territory. Last year, with the economy starting to weaken, the federal government deficit was an all-time high - $455 billion dollars. This year, the federal budget deficit will be - are you ready for this - at least four times that. Almost two trillion dollars. Most economists say there is nothing wrong with deficit spending, as long as it is no more than three percent of our entire economic output. This year, it will be 13 percent.
The last time we had a deficit that size was during World War II. Spending off the charts was brutally necessary then, and it paid off. We had full employment, and won the war. A lot of people are convinced that this much spending is utterly necessary to prevent our economy from collapsing into something like the Great Depression.
I suspect they are right. But at some point, you have to worry that we won‘t even be able to service all this debt.
Michigan, which by law has to balance its budget every year, will hit the wall a lot sooner. We will probably be able to balance the budget this year and next by using most of the $7.6 billion in federal stimulus dollars. That’s not what it is supposed to be for, but we are doing it anyway. Two years from now, that money will be gone, the piggy bank will be empty, and the state will face something like a $3 billion deficit. And doing so, it now would seem, without a plan.
Many of the politicians don’t care, because they are term-limited and will be gone. But we will still be here.
We need to demand some kind of statewide summit conference aimed at coping with the post-2010 future, and demand it now.
Our state is staring at something like a serious cancer of the economy. We can choose to cope with it now, and likely take some very unpleasant treatments. Or we can ignore it, and let it kill us.
That’s something I hope we are not willing to do.