Leaning on The Panic Button

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For two centuries, the idea that the federal debt would be the ruin of America was among the nation's great political hobgoblins -- right up there with the Red Menace and the Yellow Peril. Public indebtedness, said Thomas Jefferson, who spent $27,267,622 of the national treasure to purchase Louisiana, is "the greatest danger to be feared." Herbert Hoover, whose policies helped usher in the Great Depression, declared that "government borrowing . . . is a device to load our extravagance and waste onto the next generation." Eventually, though, as Armageddon kept getting postponed and new generations thrived, the issue receded into the more fevered right-wing swamps. Then came the 1980s.

Under Ronald Reagan, a conservative who had earlier inveighed against federal red ink from any soapbox he could find, the U.S. went from being the world's largest creditor nation to being the world's largest debtor. When Reagan took office, the budget deficit was about $74 billion, and the national debt (i.e., the sum of all previous deficits) was nearly $1 trillion. In three years the deficit had soared to $200 billion; and when George Bush steps down, he will leave behind a projected fiscal 1993 deficit of about $340 billion. Today interest on the debt consumes 20% of the federal budget, up from 15% four years ago and a total debt approaching $4 trillion. Suddenly, after all this time, Jefferson and Hoover -- not to mention the early Reagan -- seem to have been right. This thing is getting serious.

But not, perhaps, quite so serious as Harry E. Figgie Jr. believes. Figgie is the author, along with University of Arizona economics professor Gerald J. Swanson, of a slim best seller titled Bankruptcy 1995: The Coming Collapse of America and How to Stop It (Little, Brown; $19.95). If you want a really good holiday-season scare, be sure to pick up this half-baked Figgie pudding of doomsday scenarios and vague nostrums. The tone is set in the first two startling sentences of the introduction: "In 1995," Figgie writes, "the United States of America, as we know it today, will cease to exist. That year, the country will have spent itself into a bankruptcy from which there will be no return." Figgie, the CEO of Figgie International, an agglomeration of companies that produce everything from footballs to fire extinguishers, then describes how the U.S. would collapse under its great mountain of public debt, now at $4 trillion and climbing.

First Figgie describes a week from hell in 1995. He focuses on the plight of the fictional Betsy and Tom Roth, God-fearing, hard-working folks with two kids and a couple of grandparents to feed, who suddenly find themselves belly up. Among the things that happen to Betsy and Tom in the course of just seven days: they lose their jobs, their daughter's college is closed, their credit cards are canceled, their bank fails, their food costs soar, their son is seriously injured when a poorly maintained bridge collapses and the car he's in plunges into a river. By week's end a newspaper headline explains everything: DOLLAR IN FREE FALL, cries the paper, NATION IS BANKRUPT. Figgie isn't talking about mere possibilities here. In his view, shared by retiring Republican Senator Warren Rudman in a slightly less hysterical foreword to the book, the plight of Tom and Betsy will be shared by virtually every American if the country does not change its profligate ways.