Aging Washington "Dean" David S. Broder pens a column today that highlights the dangers of the increasing national debt, referencing a manifesto signed by various Washington eminces gris. Broder says this is a "a stark warning to the president and Congress and a plea for action on behalf of the next generation." This committee of veteran Washington hands, and Broder himself, can complain all they want about the deficit, but they shouldn't be doing so on behalf of the "next generation."
As the Center on Budget and Policy Priorities wrote the other day, "the tax cuts enacted under President George W. Bush, the wars in Afghanistan and Iraq, and the economic downturn together explain virtually the entire deficit over the next ten years." In other words, the previous administration helped create the huge deficits that lead to our growing national debt. Some of these "sober-sided, deeply experienced folks," as Broder calls them, created the policies that lead to the huge current deficits while serving in the Bush administration. Some were involved with the deregulatory efforts over the last two decades that led to the financial crisis and recession, which had a huge negative effect on the budget. Not everyone in this group was involved in those decisions, but forgive me if I question their credibility to speak about what we should be doing for the next generation. (David Stockman, I'm looking at you.)
In fact, it seems like whenever federal money might be spent to alleviate economic suffering, suddenly someone (usually over the age of 50) comes out to shout about "generational theft," which is what happened during the stimulus debate last year. Well, generational theft is creating this current recession, where young people graduating from college and entering the job market are going to have lower earnings over their entire lifetimes, not passing legislation to help support the job market. Teenage unemployment is 26.7 percent right now, which is the highest its been since 1948. The next generation is in trouble right now because of the economic policy decisions supported by some of these people, not because of the national debt's eventual effects on taxes and interest rates.
Is rising national debt a problem? Yes, but on the scale of priorities, the recession and 10 percent unemployment is the more pressing one, especially because there is no sign that inflation is increasing and pushing up interest rates in a damaging way. Inflation is the dog that hasn't barked, and we should take that as a sign that we can do more to stabilize the economy now. There is nothing wrong with calling on Obama to make long-term plans to deal with the national debt, but if Broder and his ilk can't do so without ignoring empirical evidence about the benign effect of all this new debt so far, it should raise questions about their motivations. Broder writes that the report says we are facing a debt-driven crisis, but that's not even what it really says -- it actually predicts a "debt-driven crisis" that will come sometime before 2020, which could "unfold gradually" or "happen suddenly," but whose "tipping point is impossible to predict." That's just scare-mongering.
Obama has already taken steps to lower the deficit over his time in office, and should continue to do so; he should also work to stabilize the national debt as these writers suggest -- some of their ideas have merit, but they tellingly shy away from specifics. Health-care reform is one major debt and deficit reducing effort but many of these debt scarers don't have anything to say about it. In fact, the more you think about the entrenched problems of the deficit -- the untouchable subsidies, the inviolate Defense Budget, the constant efforts to cut taxes, particularly on the wealthy, the massive opposition to real reform of the health-care system -- the more it seems that these paragons of Washington are the last people we should listen to about the national debt. Young people do have a special investment in our nation's fiscal future, but it's not right for Broder or anyone else to use the next generation as a rhetorical cudgel.
Update: Big props to Stan Collender for the real talk.
-- Tim Fernholz
