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What Is the Christian Thing to Do About the National Debt?


With Trillion dollar annual deficits, an accumulated debt of $16 trillion and climbing, unfunded promises that are almost incalculable – what should be the Christian response?

The wicked borrows but does not pay back, but the righteous is generous and gives; (Psalm 37:21, ESV)

Debt is not just a financial issue; it is also a moral issue. Sooner or later, in one way or another debt will be repaid. We cannot ignore it; it will not go away by itself.

How do we eliminate the deficit? There are only two ways: reduce spending or increase revenues.

With the deficit spending being about 40% of every dollar the federal government spends, reducing spending enough to eliminate the deficit will never happen. The spending cuts would have to be too drastic. While we must reduce spending, we cannot do enough of that to rid ourselves of the deficit.

How can we increase revenue. The intuitive answer is to raise taxes. This could work, except for one thing. Raising tax rates does not necessarily increase the revenue from those taxes. This is the path some have chosen. However, higher taxes cause people to change their behavior to avoid them. Some do it by illegal means; others do it legally. One is tax evasion; the other is tax avoidance. (Some “wag” said that the difference between these is about 20 years.) Both will occur (as they do now). All major corporations have lobbies in Washington trying to make additional loop holes to reduce their taxes. Because the stakes are so high and they commit large amounts of campaign money, they are able to influence many in Congress to tuck “little” provisions into legislation to favor their industries (or even their specific companies). That is legal tax avoidance; it’s not right, but it is legal.

Of course, business corporations are not the only “special interests” who lobby for their own advantage. State and local governments also lobby to gain more of the federal “pie.” Labor unions want to gain advantages through changes in labor law. Nearly everyone is in one “special interest” group or another, groups that look for advantages for their members. The only problem is that these “advantages” come at the expense of others.

The counter-intuitive way to increase revenue is to have the same (or even lower) rates, but to increase economic activity. This is the way Reagan chose in the 1980’s. He lowered taxes, reduced tax loop holes, and nearly doubled the revenue to the government. The only problem is that the Congress increased spending by more than $1.00 for every dollar of increased revenue. Result? The deficit still increased, even though revenues were at record highs!

So, in the words of the King in <i>The King and I</i>, “It is a puzzlement!” Greed is at work here – on the part of many people. Tax payers want to pay less in taxes; nearly everyone wants to get “free” money from the government. But there is no “free” money. Even when the government cranks up its printing presses and prints money, wealth does not increase. Wealth increases only by productive work and investment, which is the last thing many of us want to do.

That is why debt is a moral issue, not merely a financial issue. So how can a Christian respond to this national problem in a moral way? I’d like to offer these suggestions:

First, be compassionate to those who are in genuine need. Help those who are unable to work – but as much as possible, do not encourage those who are able to work to “sponge” off of others. Further, do this as much as possible through private, not governmental means. To me it seems that the more government is involved, the more people feel that “it is my right” for someone else to support them.

Second, in our personal affairs, live as much as possible without debt. Paul did say, “Owe no man anything, except to love one another” (Romans 13:8). I know. In today’s world it is not possible to live without bills: rent, car payments, utilities, taxes, and so on and so on. But do you “owe” a bill before the due date? Bills payed on time are not “debt.” Debt is underlying borrowing – so a car payment or a mortgage payment are not just bills; they also represent debt. Credit card bills have current spending – and debt, if any balance is carried forward.

Third, in voting try to keep these principles in mind: Printing money does not increase wealth; only productive work and investment does that. Borrowing for current expenditures must be repaid. Taxes, though necessary, can stifle economic activity and thus stifle wealth creation. Governments, like families, must live within their means; they cannot borrow their way to prosperity. A certain amount of borrowing for building projects may be necessary – but it will always add to the long-term costs of any project. Borrowing for current expenditures means payment is delayed (and interest accrues) into the future.

Then, one more explicitly stated Biblical principle:

The rich rules over the poor, and the borrower is the slave of the lender. (Proverbs 22:7, ESV)

Debt involves bondage until it is repaid. The lender is able to call the tune; freedom of action is lost because of spending commitments previously made. This is true of governments as well as of individuals. When a government is in debt – especially to foreign interests – its freedom of action is severely curtailed. When individuals are saddled with debt, their financial freedom is gone.

Hence, in voting and in spending, we need to keep these financial realities in view.

Looking at our national financial situation, it appears hopeless – that we can never repay the debt.  For many years I have said that the debt will be paid – by printing money to pay it. To do so, however, will inevitably result in inflation. That will benefit debtors at the expense of creditors. (And of course, the Government itself is the biggest debtor.)

The situation is not entirely hopeless though. A robust, growing economy CAN increase revenues enough to begin repaying the debt. It will take a long time – maybe more than one generation. WILL this happen? That depends on the moral fiber of the American people.

In a moral crisis, such as this, Christians can and should take a lead – by personal responsibility, by themselves helping the weak and helpless, encouraging others to do the same – AND by insisting that government begin making the hard choices necessary to first eliminate the deficit and then to responsibly pay down the debt.

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