Here’s a free-ranging panel discussion I took part in on many of the hot econo-topics of the day, well managed by Jeff Greenfield. One notable point:
Though the discussion was broadly focused on inequality, mobility, and growth, note how we kept going back to debt, deficits, and tax policies. This, IMHO, is a Washington disease (in fact, the panel seemed to agree on this point pretty far into the discussion). Of course, these things matter, but they’re not obviously central to questions of growth and inequality. The growth in inequality, for example, has been very much a market driven, pre-tax, phenomenon. And as I point out somewhere in there, the historical record, both here and abroad, comes nowhere close to showing even correlation between low tax regimes and better growth or jobs outcomes, much less causation.
By endlessly engaging in the obsessive debt discussion, even when we set out to talk about something else, we play into reactionary hands. The discussion becomes, or at least, it has become, one where everyone agrees on cuts and thus the argument devolves to “I’ll balance the budget in X years, while you only get to primary balance*.” Then we squabble over whether your budget really gets to balance in X years or X+5 years, all the while failing to address the real problems of narrowly shared GDP growth leading to weak job and wage growth for most households.
Again, don’t get me wrong. We clearly need to raise more revenues, strengthen our public goods, refund those parts of the budget–I’m thinking of the non-defense discretionary budget, with few defenders and many defunders–that invest in low-income kids and their families, and build on recent progress in slowing health care spending. And that means arguing about debt and deficits. But wouldn’t it be nice if instead of starting from “what’s the optimal debt level?” the debate began with “what are the investments and policy changes that will ensure broadly shared growth?”
*The House budget by Rep Ryan allegedly gets to balance in 10 years; the Senate budget gets to primary balance, which is enough to start reducing the debt/GDP ratio–detail on these concepts here.