How Vacuousness on "Serious Issues" Takes Over the US Political Discussion

In a column last Tuesday, I indulged in a brief digression about an interview of Matt Gaetz, the Florida congressman who is currently leading the effort to shut down the federal government.  I could have noted there that Gaetz's escape from being indicted for sex trafficking (involving at least one minor) seems to derive from his history of hanging out with people who are so sleazy that they would make bad witnesses against him at trial (and who he, of course, now trashes for being in prison).  I could have done that, but there were too many other issues to talk about.

The least sensationalistic of those other issues, which was relevant to the central point of my column, was Gaetz's attempt to sound like a sober-minded adult in the interview by decrying the national debt.  I wrote that, "when it came to saying anything at all about actual policy matters (as opposed to intra-party squabbling), he ritualistically invoked the national debt as a reason to criticize Democrats.  It is now simply one of the things that conservatives say when they need to sound at least semi-serious."

Setting aside the absurd hypocrisy of Republicans complaining about pushing up the national debt (which they are happy to increase whenever there is a Republican president), the point was that there are some things that politicians, pundits, and journalists grab onto whenever they need a lifeline, and "our national debt problem" is almost always Exhibit A.

On a similarly "serious" issue, Republicans are still trying to invoke what I characterized in a Verdict column last year as "the 'Inflation, am I right?' phase of the public’s discussion."  But at some point, that go-to complaint loses its fizz, because inflation can come back down again -- and it has.

Talking about the national debt as proof of one's seriousness, however, is evergreen, because it is affirmatively bad economic policy to pay down the national debt -- which would require running annual surpluses and would thus be not just damaging economically but unpopular politically.  This spares vapid politicians and other people who have no idea what they are talking about from ever being faced with a moment when the national debt, measured in dollars, declines.  It is always "a problem," because the raw number always goes up.  And because people have it hardwired into their brains that national debt is bad bad bad, one of the only truly bipartisan moves in US politics is to say, "Oof, that national debt, am I right?"

Before getting to my argument regarding the political damage from all of this, I should take a moment to explain why national debt is not per se bad bad bad, or even necessarily bad at all.  Longtime readers of my work know that I have taken various stabs at this over the years (indeed, my economics dissertation was focused on debt and deficits) but I cannot reasonably expect people to go back and read my prior work, even if I were to provide links to an endless list of columns, law review articles, and so on.

But in a discussion last week, my new crop of research assistants indicated that they (and presumably others) would benefit from hearing at least a truncated version of my counter-intuitive dovishness on the national debt.  Fair enough.

I began the discussion with my RA's by mentioning that I had received a helpful email from a frequent reader of Dorf on Law, who offered an analogy to reporting about crime.  That emailer noted that it is incredibly easy to sensationalize crime and to fail to put statistics into any kind of context or perspective.  This is undoubtedly true, which was painfully clear during last year's successful recall of San Francisco's progressive district attorney Chesa Boudin, who was wrongly vilified for an increase in property crime that still left his jurisdiction with much lower crime rates than many Republican-led jurisdictions that still use "tough on crime" brutal tactics.

I nonetheless think that this analogy is unhelpful, because it treats "crime" and "debt" as being unambigiously bad things that can only be understood by keeping them in perspective.  If, for example, someone says that "there were 500 murders in this jurisdiction," any sensible person would want to know the time frame in question (a day? a year? since statistics first started being compiled?), the trend of that number over time, and so on.

So yes, it is true that screaming about "500 murders!!" is often dishonest, especially when used as a political attack line.  Even so, murders are -- and I hope I am not going to shock anyone here -- bad.  Five hundred murders are bad.  One murder is bad.  In a perfect world, there would never be any murders, full stop.  Can we say that about government debt?  Absolutely not.

Government debt comes into existence through free, uncoerced market transactions.  No one holds a gun to anyone's head to force them to hold government debt.  When a government decides to borrow money, it offers to "sell" securities to private investors, and those securities are auctioned off in a process that determines how much private lenders must be paid to be willing to loan their money to the government.  Every existing government security -- indeed, every debt security of every kind traded on public exchanges -- is the result of two parties reaching agreement.  The borrower says, "If I promise to pay you $100 in eighteen months, will you give me $90 today?"  The lender can decline, but if she says yes, then she is evidently satisfied.  Her investment portfolio has $90 more in securities and $90 less in cash, but she is pleased because she has decided that she is happy to have the lender owe her that money -- and to pay interest for the privilege of doing so.

What makes the US government's debt unique is that it is free of default risk.  Or it used to be, until Republicans decided to make the once-unthinkable possibility of a government default very thinkable by turning the debt ceiling statute into a hostage-taking device.  Setting that rather weighty matter aside, however, even a government shutdown does not threaten the risk-free nature of government debt.  Again, the only time the federal government's debts would not be paid is if Republicans were ever to refuse to increase the debt ceiling (and a Democratic president chose to ignore the Buchanan-Dorf advice to refuse to default on our obligations)

When we say that there is $X of US government debt, we are saying that the Treasury Department issued securities (alternatively called T-bonds, T-notes, or T-bills, for reasons not pertinent here) as a means of promising willing borrowers that they will receive their money back, plus a guaranteed rate of return.  And even before the securities mature, Treasuries are so widely used and trusted that a holder can sell a security to another willing lender, where the transaction would again involve two happy (or at least satisfied) parties acting of their own free will.

Unlike crime statistics, therefore, the statistics on debt are not automatically regrettable.  We are rightly outraged when someone is raped, when homeowners are defrauded, and so on.  Even though there might be "happy" people on the other side of those statistics (rapists, con artists, and other evildoers), it would be monstrous to say that these were balanced "transactions."

By contrast, debt for one party is an asset for another party.  That outcome is not knowably and automatically bad, and in fact there is a rebuttable presumption that it is good, because both sides of the transaction said so (through deeds, if not also words).

But too much of a good thing can become a bad thing.  This is why lenders enforce standards for borrowers -- or, when those standards are ignored, why we end up with things like the subprime mortgage crisis, which was the driver of the Great Recession of 2008-09.  People might try to borrow too much in relation to their means, and if they are allowed to borrow to excess, that can be bad for everyone -- not just the two parties to the now-defaulted loan, but to the rest of the economy, which is vulnerable to the modern equivalent of bank runs (or, as happened earlier this year with Silicon Valley Bank, simple old-fashioned back runs).

Notably, the US government is in the unique position of being able to create the money that it would need to pay its ongoing debt obligations, which is why they are free of default risk.  But doing so willy-nilly could create a financial collapse.  There is nothing crazy, therefore, about worrying whether the US could possibly borrow too much money at some point.  As I have written many times, however, there is no evidence that we have ever come close to the limit, nor do we know how to determine with any precision at all what the limit is.  We do know that other countries, in particular the UK and Japan, have carried much higher levels of debt than the US, which is one of the reasons that I have continued to be a debt/deficit dove for all these years.

To be clear, however, the point about context made by the emailer mentioned above comes into play here, because when I referred to other countries carrying "much higher levels of debt than the US," those comparisons can only make sense if one refers to government debt as a percentage of GDP (national income).  In one of the few areas where analogizing government finances to household finances makes sense, we know that a person with an annual income of $50 million can comfortably and safely carry much more debt than a person with an annual income of $50,000, so saying that a person has (for example) $8 million in debt tells us nothing without further information.

To return to my Dorf on Law column from last week, my main complaint there was that The New York Times has made a habit of scaremongering about government debt in a way that takes dollar amounts completely out of context.  I was responding specifically to a column that ran under the headline: "U.S. National Debt Tops $33 Trillion for First Time" (which was identical to their headline from last year, with the second "3" being a "1" in the earlier column), with absolutely no indication that that number means anything other than "AAAAHHHHHH, WE'RE DOOMED!!"  As I noted, even the $33 trillion total is wrong for a different technical reason, but even the "right" number ($26.2 trillion last week) is also utterly context-free and thus meaningless.

At the top of this column, I used Gaetz's flailing invocation of debt to support my claim that people in the public eye inevitably try to sound smart by saying "debt bad."  For fans of "Brooklyn Nine-Nine," think of Jake Peralta's attempt to sound smart at an art gallery by saying, "Hmm, cool, human chrysalis and whatnot."  Or, for those favoring older TV classics, there is always Radar O'Reilly's "Ahh, Bach!" on "M*A*S*H."

Perhaps, however, it is unfair to use Gaetz to prove what is normal in US political discussions.  He is, after all, anything but normal.  I honestly think that it is his very abnormality that makes the point, however, because even a person who is as addled as Gaetz has learned that the way to be accepted into polite society is to condemn the federal debt.  But if Gaetz is a bad example, another example came up last week, when the very liberal/progressive host Ali Velshi on MSNBC was interviewing two now-retired Republican House members -- one of them a Tea Partier -- about the dysfunction that people like Gaetz have wrought on Congress.

Barely two minutes into the segment, Velshi mentioned an interview that he had just finished with a currently serving Republican in the House, Don Bacon of Nebraska.  Velshi quoted Bacon as saying that "$33 trillion debt, increasing debt, that's a legitimate discussion" to be had.  After then saying that there are mechanisms in Congress that would facilitate legitimate discussions, Velshi then added: "But we're not having the legitimate discussion about $33 trillion in debt.  We're actually having a different discussion, sadly."  Sadly?  One of the interviewees then matter-of-factly referred to "the unsustainable fiscal trajectory of the country," saying that Social Security and Medicare need to be cut.

So MSNBC's Ali Velshi and the Chaos Caucus's Matt Gaetz (to say nothing of two arch-conservative but “normal” Republicans) agree on one thing: "The $33 trillion in debt" is bad and needs to be addressed.  At least one of the interviewees referred to the country's "fiscal trajectory," which has a grain of nuance to it, if barely.

The point -- and it is in no way a new one -- is that major news outlets, especially The New York Times, set the agenda for the entire political spectrum.  Velshi had surely read last week's breathless Times piece about our "record-setting" federal debt without giving it a second thought.  Debt is a serious issue, he thinks, and we should be thinking about serious issues, like why we have $33 trillion in debt (mismeasured and completely out of context).

As I have argued again and again, however, adopting this framing is in no way neutral.  Last year's hyped-up Times piece about the $31 trillion level of debt at least mentioned -- briefly, and late in the article -- an argument that would weigh in favor of a reduction in the growth of US debt, if it were true.  It is not true, but it is even more worrisome that the full range of the political spectrum is now mindlessly spouting the number 33 trillion as a mantra.

Again, every single one of those dollars was loaned to the US government freely by people whose only requirement is to be paid in full and on time.  Turning that into a full-on panic that is accepted without evidence or argument across the political spectrum is a rather astonishing feat of anti-government propaganda.  When even the people who should know better are robotically repeating a Republican talking point, we are in bigger trouble than I ever imagined.