A Time cover story on the national debt has been criticized by the media for its portrayal of America’s national finances.
The article told readers that every American owes almost $43,000 on the debt, but counterarguments that the debt is a good thing gloss over the problem of the national debt.
“We owe more than we can easily repay. We spend too much and borrow too much. Worse, we promise too much. We conjure dollar bills by the trillions–pull them right out of thin air. I won’t insist that this can’t go on, because it has. I only say that it will eventually stop,” James Grant wrote in a plea to “make America solvent again.”
It’s a fair point. It’s not clear that Grant’s approach, however, matters.
“The Time cover is yet another example of a broader phenomenon: telling people how a large political problem might personally affect them can often undermine the very purpose such rhetoric is designed to achieve. Self-interest is often not the political motivator that intuition would suggest,” Adam Seth Levine and John Sides wrote for The Washington Post.
A political problem can be too overwhelming for many Americans to address it. Which, in the context of public policy, is frightening, and explains why so many problems can stick around beyond an innate difficulty and political gridlock.
The $43,000 figure glosses over the nuance of debt. It’s not clear that Americans need to repay those debts. He pegs the total debt at $13.9 trillion, taking the amount “held by savers and investors both here and abroad.” When including the debt that the government “owes itself” among different departments, it’s $19 trillion. Some critics think the $19 trillion is misleading because it counts the cost but ignores the benefits that come from debt.
“It’s not necessarily true that we’re best off being completely out of debt,” Economist Antony Davies said in a Cato Institute podcast. Debt is a liability, but it isn’t a handicap.
Often, debt is an investment. College students borrow to pay for college. Workers borrow to buy a house or a car. The implication of accepting debt is that it makes the borrower better off in the future. So long as the government isn’t crippling future growth, debt levels aren’t such a big issue.
The profligacy of spending, though, falls on future generations. The more unwisely that governments spend, the more of a burden that’s created for the children and grandchildren of Americans.
Grant is right to be concerned about government spending and the implications it has for future generations. Moderation, though, matters more than abstention. That applies to writers concerned about high debt levels as well as writers dismissive of any concerned about spending.
