This month, Congress averted another federal government shutdown. In doing so, it prolonged the increasingly common practice of funding the government through continuing resolutions — an unfortunate tradition that has occurred each year since 1998. Despite this temporary reprieve, the country still faces an ever-increasing federal debt, thanks to Congress also voting to raise the debt ceiling this month, which steadily ticks upward year over year.
The last government shutdown, which began three years ago this month and ran for 35 days, was estimated to have a negative impact on U.S. GDP. While a permanent reduction in government spending can be a net positive, temporary shutdowns are disruptive and have economic costs, including negative effects on the stock market. In addition, allowing steady increases in the federal debt creates its own opportunity costs, which deserve to be acknowledged and debated by our elected representatives but are frequently glossed over.
Beyond shutting down the government and raising the debt ceiling, headlines on any given day showcase numerous issues with profound economic implications that are seldom understood. According to the Congressional Budget Office, President Joe Biden’s $1.75 trillion Build Back Better Act would add $160 billion to the national debt over the next 10 years. In recent months, the public has experienced inflation not seen since the stagflation era of the 1970s, which a San Francisco Federal Reserve Bank report attributed in part to the federal government’s $1.9 trillion in COVID-19 relief programs. Putting aside the relative merits of the Build Back Better Act and COVID-19 relief, all too often left out of the political conversation are the costs of our government leaders’ choices.
Economic literacy, the understanding of fundamental economic principles and the ability to apply them in real life, is a critical tool that all people should possess, whether you are a member of Congress or the head of a household. Unfortunately, too few Americans have a strong grounding in basic economics, as is evidenced by surveys testing economic understanding among adults. A 2019 survey of U.S. teenagers also showed that while young people believe economic education is important, many still lack a basic understanding of important economic concepts.
My organization, the Foundation for Teaching Economics, exists to combat these gaps in economic education. FTE hosts in-person and online programs for high school teachers, equipping them with the tools to teach economics to their students. Each year, more than 1,500 high school teachers participate in these programs, educating an estimated 200,000 students annually.
Our new educational unit, Making Sense of the Federal Budget, Debt & Deficits, is more timely than ever. Discussions of federal budgets, debt, and deficits dominate our news, but these conversations tend to be shallow sound bites, accusations of one interest group or politician trying to score political points. This curriculum unit brings a rational, measured analysis to help educators better teach these terms and the implications of each for our country and our economy. It uses the economic way of thinking to provide students with a better understanding of the incentives, costs, and benefits of the respective spending choices facing U.S. policymakers.
Through these programs, as students graduate and enter adulthood, they become more informed citizens, steadily increasing the level of economic understanding across society. This is important because our system of government is only as strong as the citizenry on which it rests. Following the Constitutional Convention of 1787, when Benjamin Franklin was asked what type of government the framers had organized, he famously replied, “A Republic, if you can keep it!” We should take Franklin’s wisdom to heart. To promote sound economics and sound politics, we must continue to promote the economic way of thinking, year by year and generation by generation.
Ted Tucker is the executive director at the Foundation for Teaching Economics, a nonprofit educational organization that promotes experiential learning and the economic way of thinking. FTE was established in 1975 and operates as a program of The Fund for American Studies.
