By Michael Pakaluk
Search the Catechism, the Compendium of the Social Doctrine of the Church, or indeed the entire Vatican website—search as much as you like—and you will find no teaching on what we call the “national debt.” You can find teaching on the debt that poorer nations owe to richer ones, the “external debt,” but not on the debt a government accumulates by financing deficits.
A bit of context: each year the U.S. federal government spends roughly two trillion dollars more than it takes in and issues bonds to finance that deficit. Each year’s deficit, when not paid off, is added to the “national debt.” Last week this accumulated debt made headlines for surpassing 40 trillion dollars. In about four years it will reach 50 trillion. The current debt represents about seven times the government’s annual revenue. The ratio is like a husband and wife who together earn $50,000 a year carrying $350,000 in credit-card debt.
Imagine such a couple who almost never paid attention to their massive debt. When they did, they could never agree on a plan to stop the debt from growing, because they fought constantly and each had favorite projects of their own. That is our government.
People say: “But the government is not a household; it can raise revenue at will through taxes, or print money.” Political society, however, is a household. Our nation is a household. The government is not. It is, rather, the leadership over a household, invested with sovereign authority.
Sovereign authority, by natural law, comes from God. It is a creature’s participation in God’s authority. Therefore, because it is a creature’s authority, the last thing it can be is unlimited; and because it is a participation in God’s authority, the last thing it can be is arbitrary. The government is not a Leviathan. The government cannot make something out of nothing. It must exercise responsible stewardship over the household. The analogy holds.
How great a Leviathan can it be, anyway, if every year it must go to the markets and induce other countries (Japan, the United Kingdom, China) and investors to lend it tens of trillions of dollars? With our constant squabbling and no plan to stabilize the debt, one would think that, in the long run, those lenders would demand a higher return.
This could throw us into a vicious circle, as servicing our debt costs more and more and depresses economic activity. Legendary hedge-fund investor Stanley Druckenmiller argued this week in the Wall Street Journal that this is exactly what we are seeing now (“Let the Bond Market Speak”). He calls it “generational theft” (i.e., future generations will pay). The usually sober Eurointelligence was more direct: “We think it will end in some kind of default. . . . It falls squarely into the category of things that end one way or another because they are unsustainable.”
The Church thinks in centuries. It is not as though irresponsible governments that pile up debts they cannot pay are unknown in world history. Often those debts were contracted so that kings could wage wars of vanity and conquest. Typically, the debts were later rendered irrelevant by devaluing the currency, which becomes a form of theft.
As Samuel Gregg has noted (“Debt, Finance, and Catholics”), many early-modern Catholic theorists spoke harshly against such governments. Bishops, too, were astute on the matter, because theologians then needed to be experts in the casuistry of usury.
What explains the Church’s silence today? Part of the reason is that our bishops and popes generally lack real experience in commerce and the necessary theoretical background in economics. Two exceptions were Leo XIII, who could rely on his friend, a true genius and expert in both theology and economics, Fr. Matteo Liberatore, S.J., and Pope John Paul II, who saw firsthand the economic irrationality of socialism. And he prudently relied on his own friend, also a genius, Michael Novak.
Otherwise, we have the spectacle of a Church that, more than a century ago, opened a field of teaching on social structures, but has since failed to foster relevant expertise in social theory among the clergy or to make shrewd use of lay advisors who are both faithful Catholics and good economists.
Our bishops say nothing about the problem because they cannot even see that it is a problem.
Another reason is that popes and bishops have tended to view violations of subsidiarity as merely ethical problems: Benedict objected to “the State which would provide everything, absorbing everything into itself,” but only because such a State “ends up becoming a mere bureaucracy, incapable of guaranteeing the very thing which the suffering person . . . needs: namely, loving personal concern” (Deus caritas est, 28). He did not also say, what is true and pertinent, that such a State rides on the backs of families and will inevitably end in bankruptcy.
Such a State, Chesterton quipped, “is simply wasting a natural force and then paying for an artificial force; as if a man were to water a plant with a hose while holding up an umbrella to protect it from the rain.” (“The Free Family”) That is costly and unsustainable, whether or not it is a failure of love.
Let us review the basic questions of social justice at stake here. It is unjust for a father to borrow large sums for his own purposes, knowing he will die before having to repay them, unloading his debts onto his children; similarly, it is unjust for an older generation to do this to a younger one.
It is unjust in a republic for a people to be taxed without their consent; similarly, it is unjust for an older generation to force future citizens to pay taxes for what they themselves spent, regardless of the consent of the younger generation that pays the taxes.
It is wrong for a person to selfishly instrumentalize others, and likewise it is wrong for an older generation to instrumentalize the younger—whether, to advance our purposes, we make them pay through the nose, or with their lives.
About the Author
Michael Pakaluk, a scholar of Aristotle and ordinary member of the Pontifical Academy of St. Thomas Aquinas, is professor of Political Economy at the Busch School of Business of The Catholic University of America. He lives in Hyattsville, Maryland, with his wife Catherine, also a professor at the Busch School, and their children. His collection of essays, The Shock of Holiness (Ignatius Press) is now available. His book on Christian friendship, The Company We Keep, is now available from Scepter Press. He was a contributor to Natural Law: Five Views, published by Zondervan last May, and his most recent book on the Gospel came out with Regnery Gateway in March, Be Good Bankers: The Economic Interpretation of Matthew’s Gospel. You can follow him on Substack at Michael Pakaluk.