U.S. awash in debt? Hardly

In last Wednesday's debate, former Massachusetts Gov. Mitt Romney railed against the level of U.S. debt.

I think it's, frankly, not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation and they're going to be paying the interest and the principal all their lives.

And the amount of debt we're adding, at a trillion a year, is simply not moral.

He went on to propose a "test" for cutting programs, including Obamacare (which actually saves money but nevermind) and the subsidy for PBS.

Is the program so critical it's worth borrowing money from China to pay for it? And if not, I'll get rid of it.

Well, under Gov. Romney's criteria, Big Bird and Obamacare should be safe.

An analysis by Bloomberg shows that total U.S. indebtedness, as a share of the economy, has declined sharply since the start of President Obama's administration.

U.S. debt has shrunk to a six-year low relative to the size of the economy as homeowners, cities and companies cut borrowing, undermining rating companies’ downgrading of the nation’s credit rating.

Total indebtedness including that of federal and state governments and consumers has fallen to 3.29 times gross domestic product, the least since 2006, from a peak of 3.59 four years ago, according to data compiled by Bloomberg. Private- sector borrowing is down by $4 trillion to $40.2 trillion.

While it's true that federal government borrowing has increased over the Obama presidency, state, local, and private borrowing have fallen much, much more.

As a practical matter, the next generation seems much more likely to be concerned about its total amount of debt service and not the entity--bank, Wall Street investor, or Chinese sovereign wealth fund--to which that debt is owed. A dollar taken out the next generation's pocket to service federal debts is the same as a dollar taken out to service school bond debts, housing debts, college borrowing, road construction, etc. A dollar of debt is a dollar of debt.

By the yardstick of what the next generation will owe, the Obama administration has been far more moral than the profligate Bush administration, which not only increased the total amount of indebtedness but did so in the context of a calamitous bubble that brought the economy to its knees (i.e., reduced our ability to pay).

And in terms of Gov. Romney's China syndrome, Americans are in a far better position to pay off their own debts and less reliant on the Chinese than they were four years ago.

Indeed, no less an authority than Fox News reported in September, "China has actually decreased its holdings of U.S. debt over the past year, dropping from $1.31 trillion in June 2011 to $1.16 trillion a year later."

You would think that someone with Gov. Romney's business experience would know how to add things. Maybe he should ask Big Bird.