Polluting us with debt

When the fall semester begins at many colleges and universities, it will be difficult to go through a day on campus without hearing about the need for environmental "sustainability." Those who overuse resources, the young say, are guilty of a form of "intergenerational theft," and this message has captured the hearts and minds of many and inspired them to political action.

But the growth in the federal government's debt is a largely ignored form of intergenerational theft. Over the eight years of the Bush presidency and the opening months of the Obama administration, we've racked up about $1.5 trillion in additional debt. Should Obama's proposed $3.35 trillion budget for fiscal year 2010 get passed, the Congressional Budget Office estimates the total debt by the year 2019 will be on the order of $9.3 trillion. At the moment, the U.S. government is borrowing nearly 50 cents for every dollar it spends.

To pay off $9.3 trillion today, we'd have to take every dollar generated in the U.S. economy between New Year's Day and Halloween - 10 months - and devote it to debt repayment. Many economists have said continuing to rack up such debt is not "sustainable."

Such a massive expansion of the national debt will indeed make future generations poorer. Government borrowing means less money for the private sector for economic growth and higher wages. And much of the stimulus money is being spent immediately rather than invested to improve capital. That's like clear-cutting a forest without replanting.

Uncle Sam's growing debt means more interest payments, which will reduce financial resources that future generations might have consumed or invested. This will have a cumulative effect, analogous to the buildup of carbon dioxide in the atmosphere. Government debt chokes off the supply of capital that is the very oxygen of sustainable economic growth.

In the language of economics, "debt pollution" causes the same kind of negative consequences for our children and grandchildren that air or water pollution causes.

As an economist, it is striking to me that there is little or no apparent interest on the part of the legions of young people captured by the rhetoric of environmentalism in the very same forces at work with respect to the national debt. If we have moral obligations to future generations to use our resources in ways that incorporate our children and grandchildren in our calculations, then we have such obligations with respect to both natural and financial resources.

Debt-financed green expenditures rob one set of resources from future generations in the name of trying to conserve other resources for them. Yet few environmentalists seem to see that contradiction and raise concerns about the debt.

If the environmental movement is really about improving the lives of generations to come and not just valuing nature more than humans, it should be just as vocal about the growth in the national debt and aware of its own contributing role to that growth as it is about the overuse of natural resources in the present day.