Eller College of Management’s renowned economics professor Gerald Swanson debuts new book, AMERICA THE BROKE: How the Reckless Spending of the White House and Congress are Bankrupting our Country and Destroying our Children’s Future
In a highly-charged election year of profound deficit denial, AMERICA THE BROKE is a critical wake-up call regarding our government’s reckless spending—as well as a blueprint for rescuing our country, our economy, and our future.
Swanson will host a free book discussion and sign copies of the book at The University of Arizona BookStore in the Student Union Memorial Center September 30 from 12:00pm – 1:30pm.
TUCSON , Ariz. – September 22, 2004 – Gerald J. Swanson’s new book AMERICA THE BROKE: How the Reckless Spending of the White House and Congress are Bankrupting our Countryand Destroying our Children’s Future (Currency Doubleday; August 3, 2004; Hardcover; $24.95) is an uncompromised attack on the ruinous economic policies that have pushed our great nation to the very brink of fiscal disaster. A passionate call-to-arms that challenges Americans to act now to avert a future of dependency and bondage, it provides a blunt and jarring look at a country paralyzed by greed and a terrifying glimpse of the consequences of our complacency. But even more to the point, it points the way to our solving these problems before it’s too late.
Swanson—who makes the challenging subject of economics understandable, interesting, and even enlightening—teaches hundreds of students at a time in the large lecture format, the hardest format in which to affect students, and has been called “a rock professor” due to his strong following. This past spring Swanson’s profound accomplishments were recognized when he was named the Thomas R. Brown Chair in Economic Education with a $1.5 million gift to the Eller College from the Thomas R. Brown Private Foundation. Swanson’s first book Bankruptcy 1995 spent nine months on the New York Times bestseller list.
As part of The University of Arizona Bookstores’ Great Book Escape series of lunch hour book discussions, Gerald Swanson will host an America the Broke discussion and signing to kick off the “From Sea to Shining Sea” series which aims to explore America from many different perspectives. The session will take place from noon to 1:30pm on Thursday, September 30 in the general books area of the UA BookStore in the Student Union Memorial Center, 1209 E. University Blvd. , Phone 520.621.2426.
Swanson’s America the Broke explores the issue of “What could destroy America?” In his words, one four-letter word: debt. At a time of skyrocketing federal budget deficits, the highest national debt in history, and bargain basement interest rates that have no place to go but up, America’s future is dangling by a quickly fraying thread. How did we get to this desperate and dangerous point? Will our children inherit a once-great nation with a third-rate economy? What can we do to prevent a complete economic collapse precipitated by the profligate spending of an irresponsible government?
Three years ago the U.S. had a $200 billion annual surplus. But after two historic tax cuts, costly wars in Afghanistan and Iraq, and dramatically increased spending in domestic programs, defense, and entitlements, we now face an officially projected 2004 budget deficit of $521 billion—the largest deficit in our nation’s history (and more than we would save if we abolished Medicare and Medicaid). And that’s not all—the real deficit, including the hidden costs of occupying Iraq and the billions of dollars in revenues “borrowed” from Social Security is nearly $1 trillion.
With the national debt having ballooned, under George W. Bush’s watch, to $7.3 trillion today (from $5.7 trillion in 2000), personal debt at its highest levels ever, and future federal spending obligations of $44 trillion, we are on the precipice of a financial abyss. And our situation is rendered all the more perilous by our dependence on foreign investors, who are more likely than domestic creditors to insist on higher rates in response to a steadily declining dollar. With America now owing approximately 40 percent of our publicly held debt to foreign interests, a simple jump in interest rates could push us over the edge.
While the historically low interest rates of the past few years lulled Americans into complacency, interest rates, Swanson points out, have no place to go but up—and the consequences will be devastating. In 2003 alone, interest on the national debt, for which we paid an average 4.6 percent rate, claimed $318 billion of government revenues—accounting for 17 percent of budgeted spending or enough to have paid for veteran’s benefits, aid to the jobless, education initiatives, environmental protection, our space program, our federal courts and law enforcement, and the Departments of Commerce, Interior, Energy, and State, plus international aid—with billions of dollars left over.
If interest rates were to double to 9 percent, we would have to pay twice as much ($636 billion), leaving too little cash on hand to cover Social Security, Medicare, and Medicaid beneficiaries—and nothing to pay for non defense discretionary programs such as education, justice, transportation, and other government functions we take for granted. And if interest rates continue to rise to the high double-digit levels last seen in the early 1980s, interest costs on the debt would exceed total tax revenues, triggering total insolvency of the federal government. “Unless we take drastic steps to halt our continuing budget deficits, we simply won’t have enough revenue coming in to cover borrowing costs. Suddenly the tidal wave of debt will swamp us, ending our ability to meet our obligations,” writes Swanson. “When that happens, America the beautiful will become America the broke.”
“How did America get to this point?” Swanson asks. “How did we blindly stroll to the very edge of a national abyss, a bottomless pit that now threatens to swallow up Social Security, Medicare, Medicaid, support for the unemployed, and every remaining strand of the social and economic safety net we have woven since the Great Depression?” The answer, he demonstrates, lies in the long history of fiscal irresponsibility of our political leaders, Republican and Democrat alike, whose addiction to spending is matched only by their disregard for the consequences of their actions. “ America,” he writes, “is plunging into insolvency because America’s elected leaders—the very people charged with safeguarding our national bounty—have squandered our country’s money in a binge of runaway spending that would rightly land any non politician behind bars.”
Taking a thorough look at the economic policies of every U.S. President from Lyndon Johnson to George W. Bush, Swansonshows how, step-by-step, we’ve walked —and then run—off the cliff of fiscal responsibility. “Welcome to Profiles in Cowardice,” he quips, “the story of three decades of reckless fiscal behavior by a series of presidents and the men and women we elected to Congress, all of it brought to a head by the presidency of George W. Bush. With a chilling disregard for the consequences, Bush has jettisoned a workable bipartisan commitment reached during the presidency of Bill Clinton, a joint effort that had put us firmly on track to solving the nation’s fiscal crisis. Instead, we are hurtling toward national insolvency on a wave of unrivaled deficit spending and unconscionable tax cuts that give the bulk of the savings to the richest members of our society.”
Painting a chilling picture of our possible future, AMERICA THE BROKE spells out just what our leaders’ fiscal irresponsibility, if left unchecked, will mean to the average, middle-class American family: a world of vanishing jobs, emptied bank accounts, stock portfolios in free fall, pensions reduced to nothing, eroded home values with no prospective buyers, and Social Security checks too small to cover rent or a mortgage payment—assuming the government will still be sending out checks. “All of us must treat this crisis as a national emergency,” Swanson urges. “For that is most certainly what it is.”
What can we do to avoid disaster? Challenging citizens to recognize the truth and find the determination and self-reliance to act on it, AMERICA THE BROKE shows us what must be done if we want our children to have a fair chance at a decent life, if we want to enjoy our old age, if we want America to once again stand on firm financial footing. Swanson takes us through a set of simple steps that can help avert calamity, from balancing the budget, cutting spending and keeping our hands off resources which are tempting in the short term, but ruinous in the long-term, like ‘borrowing’ from Social Security. He also urges Americans to act now to protect their lives, their liberties, their pocketbooks, and their children’s futures by sending a clear message to the politicians whose actions threaten the destruction of American prosperity and of the American dream. “We need to tell our government leaders in no uncertain terms that that their days at the public trough are over,” he declares. “We need to regain control over the budget—quickly. Together, we can do it. But time is short. This election year offers perhaps the last chance to persuade our leaders to change their course and act responsibility. In the final reckoning, it’s up to us to do what’s needed to save America’s future.”
The Eller College of Management at the University of Arizona is internationally recognized for pioneering research, innovative curriculum, distinguished faculty, excellence in management information systems, entrepreneurship, and social responsibility. U.S. News & World Report ranks the Eller undergraduate program #14 among public business schools and three of its programs are among the top 20 — Entrepreneurship, MIS, and Management. U.S. News & World Report ranks the Eller MBA Full-Time program #44 in the U.S. and #21 among public business schools. The College leads the nation’s business schools in generating grant funds for research. In addition to a Full-Time MBA program, the Eller College offers an Evening MBA program and the Eller Executive MBA. The Eller College of Management supports approximately 5,700 undergraduate and 700 graduate students on the UA campus in beautiful Tucson, Arizona.
Liz Warren-Pederson, Eller College of Management
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