Opinion: Can Republicans still warn about the national debt?
As I have said before, the Old Testament would read very differently if Joseph, having been summoned from prison by a dream-troubled Pharaoh, had acted like today’s politicians in Washington.
That is, if he had said that what Egypt should do was eat all of its food during times of plenty and borrow money to get even more. Then when a famine or, God forbid, a pandemic comes along, the nation might just keep borrowing more to help people because, you see, interest rates are low and, well, studies have shown that over time, economic growth will exceed the cost of interest, anyway.
Joseph could have been elected to public office with a plan like that. He could have even retired before the bad times hit. But we wouldn’t remember him well. But now imagine this twist. After seven years of abundance, a pandemic occurs and Joseph suddenly tells the pharaoh that he was wrong. Egypt needs to cut spending and eat less, after all.
Today’s Sunday School lessons could focus on how moral authority can be lost through madness, rather than how a prophet convinced a political leader to do something against -intuitive to save his people in the long run.
Which brings me to Republicans under President Joe Biden. Many of them suddenly seem to have embraced fiscal austerity again. It started right after the election when The Hill quoted Senator John Thune, a senior Republican from South Dakota, as saying it was time for his party to focus on spending because “I think it comes back somehow to our DNA”.
Recently, during Janet Yellen’s confirmation hearing as Treasury Secretary, he again warned of “an ever-growing debt and no apparent interest in taking the necessary steps to address it,” according to the Washington Post. Other Republicans echoed the same concerns, with Sen. James Lankford, R-Okla., calling the country’s debt “frightening.” That’s the right message, absolutely. But that rings a little false from a party that seemed to abandon such warnings when in power.
When Republicans controlled the Senate and White House under Donald Trump, they agreed with Democrats on spending bills that added $2 trillion to the national debt, after enacting debt cuts. taxes that had added another $2 trillion. That was before the pandemic hit, resulting in stimulus bills that added billions more.
When Trump took office, the national debt was around $21 trillion. Today it stands at $27.8 trillion and growing rapidly. For the most part, Republicans in Congress said little while this was happening.
Frankly, there were few political reasons to do so. With interest rates low, interest payments owed on debt have actually fallen 8% in recent years despite a 25% increase in borrowing, according to the Wall Street Journal. As long as this holds, it looks like deficit spending can go on forever. The only question that remains is how long eternity actually lasts.
Which brings me to the prevailing view among many that it doesn’t really matter. As the Wall Street Journal recently noted, a study by the International Monetary Fund looked at 55 countries over 200 years and found that interest rates lagged economic growth rates, on average, more than 50% of the time. .
However, the same publication quoted University of California San Diego economist Valerie Ramey as warning that this gap has been small over time, “and is now insignificant compared to the growth of the American debt”.
Specifically, the former Chairman of the Council of Economic Advisers under the first President Bush told the Journal, “At some point we will start to pay the price.
This price starts with an eventual return to higher interest payments, then continues to lower incomes and savings rates, the loss of the nation’s ability to respond to crises, and finally a fiscal crisis, such as the pointed out the Congressional Budget Office seven years ago.
Many economists support more federal stimulus to counter the effects of the pandemic. Many politicians say now is not the time to worry about debt.
It may be true. These are difficult times. The only problem is that no one seems to know when it’s time to worry.
As much as Republicans have lost some moral authority on this issue, it’s good to see them — anyone, really — warning about debt. Without it, it might be hard to find someone willing to talk about curbing larger spending plans.
Regardless of political expediency, someone must speak up and, when the pandemic ends, act before the nation faces a crisis of Old Testament biblical proportions.