Thursday, July 09, 2015
Political Mayhem Thursday: Er, what about that debt?
It seems that when the economy is down, we worry about the national debt, but when it is doing better we forget about it. Of course, a good economy also increases tax receipts, which makes people more hopeful about solving the debt problem. Still, it remains a structural issue that needs to be addressed by higher taxes, less government spending, or some combination thereof. We aren't Greece… but we don't want to be in that position, ever.
In listening to the candidates, here is what I hear them talking about:
Democrats: Income inequality.
Republicans: Immigration, Obamacare, less government interference with people and individuals.
Admittedly, doing health care better and shrinking government in some specific way might affect the debt, but I don't see specifics that are tied to hitting that goal.
Am I missing it?
In listening to the candidates, here is what I hear them talking about:
Democrats: Income inequality.
Republicans: Immigration, Obamacare, less government interference with people and individuals.
Admittedly, doing health care better and shrinking government in some specific way might affect the debt, but I don't see specifics that are tied to hitting that goal.
Am I missing it?
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Mark Your question describes one of our most depressing truths. We worry and talk about debt when there is a downturn and don't work to reduce the debt when we are flush. This is contrary to what we know we should do. We definitely should not be concerned about our debt until wages increase. Then we will be able to finance debt reduction through taxation and reduced spending.
Accumulating and repaying debt is a sensitive process. It is all about timing. This is not the time to tackle the debt.
Accumulating and repaying debt is a sensitive process. It is all about timing. This is not the time to tackle the debt.
So, I am very happy to agree in principle with my friend, John Osler. Debt reduction during an economic downturn is bad policy. Of course, ironically, we are in the midst of what many of our leaders call a sustained recovery. However, again I agree with John, most people right feel in their bones something much less positive. There is a disconnect between the numbers coming out of federal agencies and the reality of our communities.
At some point, we need tax reform and entitlement reform. In the near term, we need a dynamic economy. Of course, the problem is that we have gotten in the habit of not worrying about the debt during economic downturns--not worrying about the debt during periods of lackluster sustained recovery--and also not worrying about the debt during periods of real growth (so as not to upset the boom).
The bad news is that this pattern is unsustainable--and like various cities and nations in the news--the laws of logic and physics generally catch up with entities on holiday from reality.
So, maybe not a debt reduction bill today--but a plan to create sustainable growth, sustainable entitlements, and a tax system that makes sense ought to be the standard by which we judge any candidate for president. It is also the standard by which we should judge the success of any administration.
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At some point, we need tax reform and entitlement reform. In the near term, we need a dynamic economy. Of course, the problem is that we have gotten in the habit of not worrying about the debt during economic downturns--not worrying about the debt during periods of lackluster sustained recovery--and also not worrying about the debt during periods of real growth (so as not to upset the boom).
The bad news is that this pattern is unsustainable--and like various cities and nations in the news--the laws of logic and physics generally catch up with entities on holiday from reality.
So, maybe not a debt reduction bill today--but a plan to create sustainable growth, sustainable entitlements, and a tax system that makes sense ought to be the standard by which we judge any candidate for president. It is also the standard by which we should judge the success of any administration.
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