Jonathan Lloyd in his letter ("Silly dream that austerity is a cure," June 14) doesn't think America has a spending problem. He says spending isn't limited by tax receipts but, rather, from "the resource side of the ledger." We could "easily spend trillions more," to good effect on social programs, whereas "austerity" will not "magically fix our ills." Anyone "slightly knowledgeable regarding macroeconomics," would know this, he says.
Here's what he omits: debt.
Government is not just spending money that's in our pockets. Much is borrowed; much from China. The real issue (as Tom Friedman and Michael Mandelbaum's book "That Used To Be Us" explains) is what our borrowing limit actually is. Nobody can put a precise number on it, but it's not unlimited, and we're testing it with borrowing levels already unprecedented.
We're managing this debt load, for now, only thanks to historically low interest rates; our creditworthiness being rated quite high. But that could change if the market judges our debt out of control, then the interest costs on our $17 trillion to $20 trillion debt will spike up, plunging us even deeper in the red, a vicious cycle.
Interest costs plus entitlement spending will consume the entire budget, leaving nothing for anything else. Our economy will be wrecked. This is why it's vital to act to control our exploding debt.
A recent slowdown in debt accumulation has caused some unfortunate complacency. But, inevitably, our debt will balloon as ever more people collect pension, Social Security, and Medicare benefits, etc. To blithely suggest we could "easily" spend yet more trillions is grossly irresponsible.
Frank S. Robinson
Albany