What, You Thought the NYT Would Stop Fear-Mongering About Government Debt?
If you are one of the people who makes important decisions at The New York Times -- a newspaper whose publisher actually had the nerve to write in 2024 that he has "no interest in wading into politics" -- you make sure that you wade into politics whenever possible, and the more you can do it from the right, the better. You also pretend not to be doing what you are clearly doing. My most recent primal scream about this NYT verity was "We're Doing Horse-Race Political Analysis? Now?! Really?!!" published on February 27 of this year.
And if there is one policy area in which Times editors cannot resist mucking around in political issues, it is economics. They often, for example, push anti-progressive-tax narratives, as I will discuss in a column in the next week or so. Their go-to move, however, is to partner with "deficit scold" organizations to push a narrative about the evils of public borrowing. Hence, the lead story on that paper's website two days ago was: "As U.S. Debt Hits a Worrying Milestone, Washington Barely Notices."
Again, with the war on Iran still a complete disaster, with millions of people fearing for their freedom in a country where the Supreme Court has somehow decided that looking non-White or speaking with an accent can be used to justify a "Kavanaugh stop" -- to say nothing of extrajudicial killings at sea, sexual predation against women in even worse ways than one might have thought possible, and on and on -- The Times decided that its most prominent story would be a pompous mess about the national debt. Even more ridiculous, by its own reporting, the story is kinda/sorta not news: "Washington barely notices," right? So the news hook is that something happened, but only The Times and some well-funded anti-government groups noticed it, and that is newsworthy. Got it.
But what is that something that happened and that would have gone unnoticed if not for the brave reporting by The Times? The entire story is drenched in cynicism, which I will explain in detail below. Before getting there, however it is important first to explain why this kind of cynical manipulation matters.
I have recently had occasion to mention an independent media outlet in Florida called Tropic Press, which is run by J.C. Bruce, who is one of the many people who should be enjoying mid-to-late career success in American journalism but instead have to navigate the hollowing out of the press in this country. Bruce is providing an important service to the public. Even so, he knows only the conventional wisdom when it comes to many things (which is true of all of us). Of relevance here, in a piece last week describing a Trump rally at The Villages near Orlando, Bruce included this:
So, how is the economy really doing?
Substack columnist John Ellis reports today that the national debt now exceeds 100 percent of our gross national [sic] product.
Said in the simplest terms, we now have more total indebtedness as a nation than we generate in revenue every year. This is a worrisome milestone because we haven’t been in this much red ink since the end of World War II.
The numbers:
We owe $31.265 trillion.
Each year, we make $31.216 trillion.
Meaning our accumulated debt is now more than 100 percent of our income.
As Ellis notes:
The government is spending $1.33 for every dollar it collects in revenue, and the budget deficit this year is projected at $1.9 trillion. That is little changed from 2025 as Republicans’ tax cuts kick in before their spending cuts take effect.
You can thank Trump’s budget bill for that. But, hey, billionaires need their yachts.
Sorry to be blunt, but this is simply stupid. Again, I will explain why momentarily. My immediate point, however, is that someone whose politics (based on everything that I have seen on Tropic Press) would never line up with fiscal orthodoxy bought this line of nonsense hook, line, and sinker. Note that the closest he comes to an argument on the substance -- that is, not merely saying "Gee whiz, look at them big numbers!" -- is that this is "worrisome" because this is the most "red ink" since the end of WWII. But so what? There are a lot of things that are now higher or lower than they were on X date in the past. Why is that a cause for worry? No explanation needed, apparently.
To be clear, I am being rather mean to Bruce here (which might say something about my mood today), but he is merely the latest in a long line of people who have absolutely no clue what these numbers mean, but they know -- just know -- that borrowing is bad. Saying so makes him think that he sound serious. Very serious, even. One might even call this an attempt to gain stature by talking like a Very Serious Person. Indeed, Paul Krugman has for years rightly mocked VSP's (Very Serious People). By coincidence, he published this short piece railing about VSP's in The Times fifteen years to the day before this week's "... Washington Barely Notices" nonsense.
Which brings us back to explaining why that Times article, which is a polemic presented not as an op-ed but dressed up as a serious factual news item, is truly nonsense.
Some readers might recall that The Times until recently had a duo of economics reporters who had been assigned to the "stoke fears about national debt" beat, and who as part of that crusade ended up publishing two nearly identical items (the latter sole-authored): "U.S. National Debt Tops $31 Trillion for First Time," on October 24, 2022, and "U.S. National Debt Tops $33 Trillion for First Time," on September 18, 2023. I responded multiple times, most notably with this: "Breaking News on the Federal Debt: 33 is a Bigger Number than Any Smaller Number!!"
Anyone with too much time on their hands might want to dive into my other responses, all of which are linked in that last column linked above. My point here, however, is not (yet) about how vacuous the fear-mongering is but rather about the deep cynicism underlying this whole line of Times coverage of US government debt. Notice that the more recent of those two NYT headlines included the claim that the "national debt tops $33 trillion," and that piece was published more than two and a half years ago. Yet the latest Times piece -- written by a new guy who seems to have been given the "scare people with big numbers" gig -- includes the same number that Bruce reported: $31.625 trillion. That is, just to be clear, less than $33 trillion. Did debt go down?
No, because the debt that is now being reported is "net" federal debt, whereas the numbers that were reported in the 2022 and 2023 pieces were "gross" federal debt. In my many, many columns over the years in which I have vented about mis-reporting on federal debt, I have often pointed out that the net number in fact reflects how much the federal government owes at any given time, whereas the gross number is by construction larger. (The details are too tedious for this column.)
But if that is my preference, why am I not applauding when mainstream scolds are finally at the very least using the "right" number? Moreover, because I always remind people that debt numbers can only begin to make sense when expressed as a ratio with national income in the denominator, why am I not ecstatic here? After all, the new guy at The Times did two things right, did he not?
Color me unimpressed, because it was only by using the net number and expressing it as a percentage of GDP that it was possible to make this non-story seem to have any legs at all. That is, whereas the previous guys would dutifully write a piece whenever their sources told them that we were going to hit a new trillion level, doing it this way gives us a new thing that we should supposedly decry. The next trillion in gross debt that the US will reach, by the way, is $39 trillion, and it will happen fairly soon. Look for another "for the first time" Times headline. But being able to say that we crossed the 100 percent barrier? Priceless. Here is the opening:
The U.S. government learned last week that it may have reached an unfortunate milestone: The size of its debt surpassed the nation’s total economic output.
It was a striking imbalance, according to early estimates, one that the country has experienced only in rare circumstances — briefly during the pandemic, and in the aftermath of World War II. ...
As a result, the ratio of debt to G.D.P. — a widely regarded metric for assessing the government’s fiscal health — slightly exceeded 100 percent in the committee’s calculations. That last occurred for a short period in 2020, as the pandemic clobbered the economy and government shelled out trillions in emergency relief.
The problem is that there is absolutely nothing significant about a 100 percent ratio of debt to GDP. Being at 101 percent is not meaningfully different from 99 percent. Why not? Among other things, debt can only be measured as what is known as a "stock" variable, which means that it can be measured not as a rate over time but as a simple number at any point in time. GDP, however, is a "flow" variable, which can only be expressed by reference to the passage of time -- for example, that the US economy produced $31.21 trillion dollars over the course of a year. Thus, "We owe in total more money than the economy produces in a year" simply has no coherent economic significance.
As a rough analogy, a friend of mine happily learned recently that, at his current rate of spending, he will not even need to dip into the principal on his investments for the remainder of his life. But again, so what? As long as he never reaches zero while he is alive, he has nothing to worry about. Yet it seemed to him like a big deal that he will die with 100 percent of his current net worth untouched. What if his projections had told him that he would end up with "only" 80 percent? Or 300 percent? How would that matter to a person who knows that "you can't take it with you"?
The reason that I am unmoved by the new NYT guy's use of net debt and a ratio, therefore, is that he still uses it to make a non-point. Moreover, he then uses that non-point to make it seem as though he is reporting something frightening and significant -- and Washington barely notices!! How lurid is the language? Sometimes it is understated a bit: "an unfortunate milestone"; "a striking imbalance"; or "the latest warning sign about the government’s poor fiscal health."
But it does ramp up: "U.S. debt has soared in recent years"; "For economists, the fear is that these conditions are inching the United States toward a fiscal crisis"; or [quoting a guy at a deficit scold group] "at some point, you’re in this debt spiral. The only way to stop it is through some kind of big shock to the system." As a side note, the writer cannot even avoid simple but meaningful technical errors, including this: "If [US] debt continues to grow faster than the economy, he said, it will only become more expensive for the government to borrow money." But this story is not about the growth of debt but its level relative to another number. Debt-to-GDP would not have gone over 100 percent during the worst of COVID, for example, unless the denominator fell.
Never you mind. There is still time to scare some more people:
Representative Jodey Arrington, Republican of Texas and chairman of the House Budget Committee, described the new level of the nation’s debt as a “flashing red light” for the economy, but he acknowledged that both parties were responsible for “sleepwalking off of a cliff.”
“I think, unfortunately, too many people are used to these flashing red indicators that we have significant structural problems with America’s balance sheet,” he said.
Because The Times knows how to cover its bases, the reporter eventually includes this: "To be sure, economists and policymakers do not believe the U.S. government is staring down an imminent calamity." That, however, leads the 14th paragraph of the piece. And even while pretending to be fair and balanced, we get -- after nine more paragraphs of "reason to doubt [the US's] financial outlook" and drive-bys about credit ratings -- this:
Other countries, including Japan, Greece and Italy, report debt levels that outpace their annual output, according to data compiled by the International Monetary Fund. But those economies are not as large as that of the United States, nor do their currencies occupy the same, pivotal role as the dollar in the global financial order.
Why is the US economy's larger size a reason to be more worried? Why is the US dollar's pivotal role not a reason that we are less in danger of a fiscal crisis than, say, Greece? No explanation. It is all just bad, because even though it is important to stipulate that other countries (including Britain for most of its history, by the way) have been here, that is no reason not to listen to the scolds.
To be very clear, I am not saying that debt is always good. As always, I am saying that it is not per se bad. One might imagine that I would have written that down somewhere. Oh right: Out of literally dozens of places where I have made that argument, two good recent examples are here and here.
In those articles and in so, so many others, I make the point that the way to push back against orthodox debt fear-mongering is not to feed it when it is politically convenient to do so. That is the strategic error in the quote above from J.C. Bruce, who dislikes Trump and therefore decides to become an anti-debt warrior. But the reason, as always, to oppose Trump/Republican policies is because they are bad on their own merits. They waste economic resources and get nothing for it. If the debt-to-GDP ratio where currently, say, 13 percent, it still would be terrible policy -- as a matter of economics, on top of everything else -- to increase Pentagon spending by 50 percent (to build "Trump battleships," for chrissakes), to give huge tax cuts to billionaires, or to waste money in every other way that Trump wastes money.
Those who want to criticize Trump and the Republicans have more than enough material to work with. There is no reason for anyone, and certainly not The New York Times, to make a big deal about an utterly meaningless statistical artifact.
- Neil H. Buchanan