Lincoln * Institute

Col. Frank Ryan<br />USMC (Ret.)

Col. Frank Ryan
USMC (Ret.)

President
F.X. Ryan & Associates

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Rebuilding America

National Debt Threatens National Security

by Frank Ryan
 

The greatest national security threat to the United States is our national debt. A determined enemy could bring us to our knees without firing a shot.

Just as President Reagan helped bring down the Russian empire in a classic economic chess game in the 1980's, the United States faces a similar risk in 2010 and beyond.

Since 1997, the national debt has climbed from $5.4 Trillion to almost 12.6 Trillion as of March 11th, 2010, an increase of $7.1 Trillion. The Congress has authorized an increase in the national debt ceiling to $14 Trillion in order to finance record budget shortfalls in the current fiscal year.

Additionally, the White House estimates that federal debt will exceed $19 Trillion by 2015.

Household and corporate debt in the United States are increasing as well. Household debt service coverage is almost 20% of disposable income.

Corporate debt levels are equally high and troubling with some calling the leveraging of the corporate balance sheet a potential disaster.

Against the backdrop of higher corporate debt is the deleveraging of the banking industry to keep banks well capitalized as a result of staggering defaults and the mark to market accounting fiasco.

The massive federal, state, corporate and household debt creates an opportunity for an enemy of the United States to dictate our national policy and engage in a successful economic conflict with us. The enemy would merely need to stop funding our insatiable appetite for funds. By withholding funding, either costs for interest would increase or federal programs would have to be curtailed.

Unfortunately, at the very beginning of such a conflict our nation has already depleted our economic arsenals. Our country is effectively almost out of ammunition, albeit economic bullets but a weaponless arsenal just the same.

Our federal mandates are so extensive that discretionary spending cannot be curtailed sufficiently should a determined enemy wish to engage us on the field of economic battle.

Our reckless spending and the interest on the debt have the United States in a predicament. Our nation has virtually checkmated itself.

The federal and state deficits and budget shortfalls will almost certainly cause an increase in taxes. Higher taxes will reduce consumer disposable income making consumer debt loads that much more difficult to service.

The interest in the federal debt, even at current interest rates, consumes a larger percentage of the federal budget than at any time in history.

The aging of America and the increasing needs for social security funding from the general fund further exacerbates an already disturbing financial trend and depletes a workforce when most needed to help with an economic recovery and to wage an economic war.

Health care costs for an aging population are also expected to increase significantly further adversely affecting the nation's ability to restore its financial foundation.

The states lack financial viability to obtain sufficient funds needed to restore stability and yet face staggering costs for unfunded pension plans and health care programs

The solutions to the crisis are limited and becoming more limited as each day and billion of more debt unfolds.

To reduce the likelihood of such an economic catastrophe, our nation must act quickly to reduce spending, curtail runaway government sponsored pension plans, and make paying down the debt of the United States a national priority.

As Milton Friedman said in Capitalism and Freedom (Chicago, 1962, 75-76; 84): &amp;quot;Ever since the New Deal, a primary excuse for the expansion of governmental activity at the federal level has been the supposed necessity for government spending to eliminate unemployment. ... This view has been thoroughly discredited by theoretical analysis, and even more by actual experience...&amp;quot; Friedman concludes that the arguments deployed for fiscal stimulus are &amp;quot;part of economic mythology, not the demonstrated conclusions of economic analysis or quantitative studies.&amp;quot;

Until the federal government returns to the authority defined for it in the U. S. Constitution Article 1, Section 8 and further refined in the 9th and 10th Amendments to the Constitution, we are likely to be vulnerable to an economic attack.

If we act now, the decision is ours. If our nation waits, the decision is theirs.

Col. Frank Ryan served as the Central Command Special Operations Officer in late 2001 and early 2002 in Tampa and very briefly in Afghanistan. Additionally, he was recalled to active duty out of retirement in 2004 to go to Iraq where he worked with the Iraqi National Security Advisors and the Deputy Ministerial Committee of Iraq of National Security. In civilian life he is a CPA and specializes in corporate restructuring.