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Why the economy is worse than you think

Dr. Jim Denison is a cultural apologist who helps people respond biblically and redemptively to the vital issues of our day. He is also the co-founder and Chief Vision Officer of the Denison Forum, a Dallas-based nonprofit that comments on current issues through a biblical lens.

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The New York Stock Exchange floor view from Members Gallery (Credit: Ryan Lawler)

The final employment report before next Tuesday’s election comes out later this morning.  Whatever it says, USA Today‘s headline is right: “Election winner gets a mess.”

The “fiscal cliff” looms 55 days away, a convergence of tax increases and spending cuts that could throw the economy back into recession.  Without action, on January 1, 2013 the average American’s household tax burden will increase by $3,500.  The scheduled spending cut of $110 billion would threaten the nation’s security, according to Defense Secretary Leon Panetta.

But there’s more to the story.  This week I heard a fascinating lecture on America’s true economic condition.  The “national debt” we hear so much about exceeds $16 trillion, which comes to more than $141,000 per taxpayer.  This debt is composed of money the government borrows from domestic or foreign investors, as well as money the government owes itself (such as the Social Security trust fund).

The lecturer stated, however, that our government actually owes more than $70 trillion.  Stacked together, that much money in dollar bills would stretch to the moon and back 10 times.  This number includes future obligations such as Medicare, a commitment of $38 trillion that we have no current way to pay.  This deficit is in part the result of increased life expectancy—in 1935, when the retirement age was set at 65, life expectancy was 62.  Now men live on average to 83, women to 85.

When Medicare was created in 1965, 16 workers contributed retirement funds to the program for every person receiving these funds.  Today the ratio is three to one; by 2030, it will be two to one.  There are currently 40 million Americans aged 65 and over; by 2050, the number is expected to reach 86 million.  In the last 50 years, the part of the national budget devoted to defense has fallen from 52 percent to 23 percent; the part devoted to health has risen from one percent to 23 percent.

What’s the answer to our fiscal future?  A federal budget expert quoted in USA Today said, “What the next president is looking at in 2013 is a steady series of cliffhangers.  I’m not sure I see a way out of this unless everybody gets religion.”  He was more right than he knows.

Our nation needs three things: repentance, reconciliation, and revival.  We need to repent of sins that hobble our nation’s progress—theft, deceit, greed, lust.  We need reconciliation across political lines and socioeconomic status, a great vision for the future that unites and empowers our people.  But repentance and reconciliation will come only when we experience revival—a national turning to God as our King and his word as our compass.  This is the warning, and the invitation, of God.