February 07, 2014
It’s really great that we have National Public Radio. With the interest burden of the debt near a post-war low, and interest rates still at historically low levels, many of us might think that we could focus on other problems. (Netting out interest refunded by the Fed, interest payments are well below 1.0 percent of GDP.) After all, we have an economy that is still down close to 8 million jobs from trend levels, with long-term unemployment rates near post-World War II highs. As a result, millions of children are being raised by parents who lack the means to properly care for them. And of course we are wrecking the planet with greenhouse gas emissions.
Yes, many of us might be thinking about issues along these lines, but thankfully we have NPR to tell us:
“the national debt — how much the country owes from accumulating deficits from year to year — is still a huge problem. At 74 percent of GDP, it’s the highest since 1950, and it’s projected to grow.”
And how do we know this is a huge problem? Well, we heard it from Maya MacGuineas, president of the Committee for a Responsible Federal Budget. (The transcript tells us that MacGuineas “heads the campaign to fix the debt.” It should read “Campaign to Fix the Debt.” This is an organization of corporate CEOs who decided that the debt needs fixing. Fixing the debt is not some objective need that is universally recognized, as this description might imply.)
MacGuineas complains:
“”Because we’ve been so irresponsible for years, our hands are kind of tied as a country.”
Remember, the complaint about irresponsibility here is in reference to the deficit, not the housing bubble. According to the latest estimates from the Congressional Budget Office the collapse of the bubble will cost us more than $24 trillion ($80,000 per person) through the end of its budget horizon in 2024. NPR didn’t really have time to tell us about the housing bubble back in the days when it could have been pricked before its collapse would have been so dangerous. Instead it was telling us about how the deficit was a huge problem.
The theme that we can’t address problems of mobility and growth because of the debt is absurd on its face. The markets are telling us that we can borrow money at near zero real interest rates to fund whatever needs we perceive. If we can actually boost growth and increase mobility with such spending then it is our fear of deficits and debt — the opposite of the claims in this piece — that is the problem, not the debt.
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