SalemNews.com, Salem, MA

Second of two parts.

My first book on national debt, published in 2000, contains two statements I feel bear repeating here and now:

* Costs of the welfare state ... have become a national security issue because they abuse the nation's credit and bring to the budget process extreme pressures that cause self-serving politicians to under-fund Defense.

* The American experiment will be resolved in the next century. Either it will stamp its emblem of freedom with responsibility on the face of history more firmly than any social system ever devised, or it will join those who have tried and failed, like the Soviet Union, to buy power with benefits or preserve it with force. By acting or failing to act, every living American will have a hand in making that decision.

Public debt in 1996, the last year covered in my first book, was $3.6 trillion; in 2006 it was $4.8 trillion, and it is predicted to be $5.4 trillion in 2008 - up 50 percent in about a dozen years. Obviously my first tome was ignored by federal politicians.

A budget surplus has been generated during only one four-year term since the presidency of Harry Truman (1949-52). The exception to this unbroken line of deficits occurred under Bill Clinton (1997-2000) under circumstances that are not repeatable (e.g. a huge tax increase and an unwise cutback in the size of the military).

It is axiomatic that no person or government can endlessly spend at a rate higher than available revenue. Eventually, the practice brings undesirable results.

Such is the case today in the United States. Public debt and associated interest costs are so huge they limit the nation's ability to maintain the military force it needs to confront dangers posed by international enemies and competitors, and to protect the value of the American dollar.

The costs of Defense and Interest are referred to in the balance of this essay as "primary costs" for good reason: If they are not fully addressed when the need appears, the continued existence of the nation as an independent, international power becomes imperiled.

When Truman left office, public debt was $215 billion, most of it directly related to the cost of World War II that had to be partly financed by issuing U.S. securities - a sensible use of the nation's borrowing power that replicated similar actions of past presidents who also had been besieged by unaffordable external events.

Since that time, despite the fact that the U.S. was able to afford, out of current revenues, most of the increase in primary costs during the Korean, Vietnam and Cold wars, debt increased to $4.8 trillion, fundamentally caused by uninterrupted annual deficits that were fueled by exploding entitlement costs. And during this time primary costs were funded by borrowings, instead of by current revenues.

These primary costs have been characteristically under-funded through the seven presidential terms that followed the last chief executive to respect heritage, Dwight D. Eisenhower. Meanwhile, there had been a gradual reduction in the nation's military readiness (from an active force of 2.9 million to 1.4 million) in a world that has never been without consequential threats.

Two things should be kept in mind:

1.) Democrats have persistently blamed deficits on defense spending; and

2) Defense spending, as a share of all spending, has been on a steady decline since Eisenhower.

In other words, the most popular explanation for deficits is self-serving hokum designed to take the observer's eye away from the real cause - the cost of the Welfare State.

In 1960 under Eisenhower, defense spending was 9.3 percent of GDP, and 52.2 percent of total spending; in 2008, it is projected to be 4.2 percent of GDP and 20.7 percent of total spending. Higher spending for Defense was affordable under Eisenhower; lower spending (relatively speaking) was unaffordable under Bush.

If the proposition is accepted that the primary role of government is to protect the safety of its citizens, and the value of its currency, it's plain that spending priorities shifted in the 1960s. Expansion of government services became the priority to such a consistent extent that the nation could no longer afford to pay for its survival expenses, and debt had to be expanded to cover the shortfall.

Such a policy, of course, has a measurable end, not precise but foreseeable in broad terms: The security of the U.S. and its currency is affordable only for so long as money can be created through the sale of U.S. securities. And the ability to do this has a lid: Buyers must have confidence in the U.S. economy, and in the value of the dollar. When this ceases to be the case, the America that is, will decline to some undesirable condition as yet indefinable.

That end is in view, and it will come to be if leaders from both parties fail to join hands in an effort to attack and fix the budget monster that they and their predecessors created and protected for a half century.

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Robert Kelly of Peabody writes regularly for the opinion pages of The Salem News.