As President Trump recited an impressive list of his economic accomplishments in his State of the Union address, Republican members of congress cheered with abandon. Even Trump’s detractors, though reluctantly and without smiles, might have felt deep down inside that our nation’s economy is experiencing a really good time. Growth has leveled off a bit, but it’s left us in a place with noteworthy improvements in employment, earnings, labor force participation, and reducing the count of people living below the poverty line.
There’s a very compelling (though not always popular) case for optimism these days. Yet nearly everyone, optimists and pessimists alike, seems to be forgetting about one oft-ignored warning.
The Census Bureau reports that 2018 was the fourth year in a row to experience a reduction in the poverty count. And there is more good news. Construction, driven partly by warmer winters but also by low interest rates, continues apace. Even manufacturing employment, though buffeted by trade wars, is holding its own. To top it all off, consumer confidence is high, and retail sales show it.
And get this: It’s not just here in the United States under Trump’s leadership. In his end-of-year summary of world progress, New York Times columnist Nicholas Kristof telegraphed amazingly good news for the world. As he put it, “In the long arc of human history, 2019 has been the best year ever.”
Explaining such a bold claim, Kristoff points out that “Since modern humans emerged 200,000 years ago, 2019 was probably the year in which children were least likely to die, adults were least likely to be illiterate and people were least likely to suffer excruciating and disfiguring diseases.” Every single day in 2019, he continued, 325,000 people somewhere got electricity for the first time, another 200,000 got running water, and each day, about 650,000 were able to go online.
Yet evolutionary forces leave us with an irrational bias that favors bad news. For many, unfortunately, that means a cynical outlook on life. So much so, it seems, that Trump’s positive recitation of the economy’s performance and Kristof’s summary of the good news for mankind still leave many preferring to be mournful about the problems that remain — some real and some imagined.
Many worry about a middle class they see as caught in a world that produces too many billionaires and not enough ordinary earners. A look at data, however, tells us that the middle class is shrinking as more people move to the upper class and fewer are caught in poverty.
Yet while we may be living in the best of times, especially in America, not many people seem to worry about deficits and debt. Even though we now spend $1.28 on federal programs for every dollar we take in taxes, it’s a worry that seemingly keeps no one awake at night.
Indeed, some liberals argue that we should just print more money if we want more goodies, and that reservations about such behavior are, in their view, unfounded. But according to the good number crunchers at the Congressional Budget Office, deficits are growing, and the crimson ink is getting darker. Deficits will hit the highest levels since World War II across the next 10 years, and we aren’t fighting an all-out, live-or-die world war.
Indeed, by Trump’s and others’ reckonings, we are living in a veritable Camelot. They aren’t wrong, but they omit that we are assisted by a federal government credit card. Let’s hope our creditors don’t suddenly pull the plug and decide it should be a debit card.
CBO Director Phillip Swagel warns that not since World War II has the country seen deficits during times of low unemployment that are as large as what’s been projected. And that is the key point we should consider.
These are indeed the best of times. So what will deficits look like when times are not so good? And how will we look our grandchildren in the eyes when we, and they, realize that we have been enjoying a 21st-century Camelot and leaving the bill for them to pay?
How long can we kick the deficit can down the road?
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science. He developed the Bootleggers and Baptists political model.
