In today’s New York Times, David Brooks has an extended meditation on debt that relies on one giant omission:
Recently, life has become better and more secure. But the aversion to debt has diminished amid the progress. Credit card companies seduced people into borrowing more. Politicians found that they could buy votes with borrowed money. People became more comfortable with red ink.
Today we are living in an era of indebtedness. Over the past several years, society has oscillated ever more wildly though three debt-fueled bubbles. First, there was the dot-com bubble. Then, in 2008, the mortgage-finance bubble. Now, we are living in the fiscal bubble.
Missing from this narrative is a few big things. Over the last thirty years, incomes have for ordinary people have stagnated at the same time that housing, health care, and education costs have gone up. Contrary to Brooks, Americans didn’t suddenly become, en mass, a group of irresponsible spendthrifts; by and large, Americans went into debt to afford necessities for themselves and their families. In the absence of rising incomes, debt was the means through which many people bought opportunity for themselves and their children. People became more comfortable with red ink because they had to, not because they lost “virtue.” These graphs, from the Economic Policy Institute’s State of Working America, are illustrative. Incomes for everyone but the richest Americans have stagnated:
And over the last twenty years, debt has gone up most for those in the middle:
What we’re witnessing, right now, is the failure of a social arrangement. In the 1970s and 80s, government began to pare back its commitments to decent wages, affordable housing, health care, and education, and in response, Americans took on debt to make up for the loss. This isn’t working, and the result has been widespread insecurity for American families. It’s this fact that makes Brooks’ piece even more galling; here is his conclusion, where he sets up the Wisconsin recall race as a fight over the future of debt:
A vote to keep Walker won’t be an antiunion vote. It will be a vote against any special interest that seeks to preserve exorbitant middle-class benefits at the expense of the public good. It will tell the presidential candidates that it is safe to get specific about what they will do this December, when hard deficit choices will have to be made.
“Exorbitant middle-class benefits?” Like what, exactly? If the federal government has accumulated a tremendous amount of debt over the last 30 years, it hasn’t been because of benefits to middle-class families, which are far from generous. Medicare’s problems are a more recent development, and the Social Security shortfall is (conceptually) easy to fix. Where the government has been profligate, however, is with military spending, tax cuts, and wars. It’s why Ronald Reagan and George W. Bush were responsible for the largest accumulations of debt; their priorities were lower taxes for rich people and greater military spending. The recent debt explosion has everything to do with the economic crisis–driven by an unhinged Wall Street—and almost nothing to do with the benefits given to ordinary Americans.
I have no doubt that David Brooks is sincere in his disdain for debt, and his belief that the United States is in trouble if it doesn’t shrink its commitments to health care, retirement security, and social services. But here’s what the picture looks like to me.
For years, elites drained public coffers with wars and tax cuts, cheered on by “reasonable” thinkers like Brooks (who supported both Iraq and the Bush tax cuts). But now that the bill is due, they want to pay for their fun with the money we’ve marked for ordinary people. You could call this austerity, but I have a hard time distinguishing it from theft.