Debt Madness: It’s Everywhere

March 27th, 2014 at 6:05 pm

I’m on the road in an undisclosed location (ok, Colorado Springs, where nature is breathtakingly beautiful and I say that as someone who is decidedly not partaking in locally legal substances).

So I’m coming in from the airport as is my wont, I ask the driver about the local economy.  As is often the case, he gave what sounded to me like an accurate and thoughtful analysis, with special focus on sectoral developments in the military and tourist sectors.

And then, in explaining how things were better but still not that good, he said, “You know, that national debt thing is a problem here too, of course.”  And to be clear, he was by no means saying that we’ve paid too much untimely attention to lowering the debt when we should be investing in growth projects to lift labor demand and close remaining output gaps.  To the contrary, he was repeating the oft-heard line that national debt is restricting hiring.

In fact, the deficit has fallen sharply.  The debt is growing more slowly as is expected to stabilize, though at an historically high level.  And in a town that partly depends on government spending, when the private economy is still weak, premature deficit reduction is ill-advised.

It’s discouraging if not surprising that so many people don’t get these dynamics as they’ve been fed so much of the austerity line and so little of the full employment line.  But someday, maybe I’ll be on the road and ask the driver about the economy and she’ll tell me, “Well, we’re not quite at full employment, so we could use more supportive fiscal and monetary policy.”

At that point, I’ll hang up my calculator and call it a day.

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7 comments in reply to "Debt Madness: It’s Everywhere"

  1. smith says:

    1. How much responsibility falls on the Democrat in the White House for failing to control the debate, or even have a significant if not dominant impact on public discourse when discussing high deficits?
    2. How much of that failure is rooted in under appreciating the strong economic arguments against an outsized focus on the deficit?
    3. How much stems from a gross political miscalculation in trying to appease centrist voters’ fears of the deficit, vs. winning over centrists with a thoughtful yet simple argument or better economy?
    4. If Democrats can’t bring themselves to propose new spending to raise needed demand, faced with 6.5% unemployment, and control of the White House and the Senate, but heading towards a difficult election in which they very well could lose the Senate, when would they ever?
    5. Why do pundits blame conservatives for being conservative? Isn’t it as in the 2010 book “The Death of the Liberal Class” proposes, the Democrats turn right that is the most cause for concern?
    6. Aren’t Democrats still haunted by the specter of Jimmy Carter’s malaise and misery index and triumph of Reagan aided by Bill Bradley’s tax assist? (even Carter was not liberal, whose fate was decided by a sandstorm)

  2. Robert Buttons says:

    Eventually, when peoples’ lives are getting worse despite government assurances to the contrary, the Keynesian propaganda reveals itself as such and folks look anywhere but to a failed government for a solution.

  3. Larry Signor says:

    17T/188T=0.0904255=9.04%…the truth about debt. US debt/US assets is 9%…somebody please tell me why this is a problem…and if you can’t, S**U and let US move on. We have more important problems than a 9% national debt. I would be happy to trade my financial position for that of the US Treasury. There are no banks in this country, and very few substantial corporations with a similar Capx. Why do we doubt ourselves so? Our history is replete with conflagration, but the populists always win…I see no reason to doubt that outcome in our present economic and political dilemma(99%). Keep the faith, Baby.

  4. rjs says:

    this is more evidence that those who are listening to talk radio are controlling the national debate about debt and deficits.. 14 million listen to limbaugh alone:

  5. Steve Bannister says:

    “Reefer Madness?”