It’s hardly surprising that President Barack Obama doesn’t have a long-term debt plan (or at least not one acceptable for public display). As Treasury Secretary Tim Geithner infamously told House Budget Chairman Paul Ryan, “We’re not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.”
Liberals don’t like to talk about fiscal debt and deficits. If they do, eventually the conversation must curve around to how they intend on paying for their dreams of an ever-expanding welfare state. And that means talk about sharply higher taxes on everyone — or scaling back liberal ambitions to keep enlarging the social safety net.
Here’s one example of how liberals would prefer to talk about, say, green energy investment than green eyeshade accounting. In a column for Bloomberg, Ezra Klein declares that he’s “not particularly worried about the budget deficit. In fact, of all the major problems the U.S. faces, I’m least worried about the deficit.”
How can Klein be so blasé with the U.S running trillion-dollar annual deficits as far as the eye can see? First, he points out that if the Obama White House and Congress do nothing between now and year end, nearly $7 trillion in ten-year deficit reduction — higher taxes and lower spending — would begin to automatically kick in. Not that Klein wants that scenario to occur, mind you. He just highlights it as a sort of a proof of concept that Washington has the tools to solve the debt problem.
And if even the politicians aren’t willing to act on their own, he adds, frightened financial markets will eventually force them to. Of course, markets offer a rather terrible sort of salvation. A debt-driven financial crisis would force sudden and draconian austerity. We really would be Greece.
Second, Klein says that the future is very far away and many wonderful things are likely to happen between now and then. Indeed, he gently mock the debt doomsayers: “They brandish charts showing scary red lines reaching out to 2080. Those charts show a huge problem that requires radical solutions. … But those charts are really about health-care spending … What they’re really telling us is this: If you look at how medical costs have risen in recent decades and you draw that line out for 70 more years, we’re really in trouble. … But there’s something ridiculous about extrapolating current trends all the way out to 2080. By that point, we’ll probably either be robots, the servants of robots or a bit of both. Either way, the health-care system will probably undergo dramatic change.”
So rather than hoping for the best and preparing for the worst, Klein advocates hoping for the best and preparing for the best. Now he might be right. An accelerating pace of technological change might save us by creating warp-speed economic growth so we could easily finance all that future debt. Or perhaps technological wonders will somehow reduce healthcare costs. Maybe low-cost nanonbots roaming in our bloodstream will immediately heal us from all injury and disease. Everyone an X-Man.
Except that healthcare costs have been outpacing economic growth. Consumers seem to have an insatiable demand for healthcare services, especially when they aren’t directly paying for it themselves, a trend Obamacare, which Klein supports, reinforces. And the debt problem isn’t some futuristic, 2080 concern. For instance, there’s a Congressional Budget Office forecast that a) assumes Washington doesn’t deal with exploding entitlement spending and b) assumes sharply higher debt levels do hurt the economy. According to that plausible scenario, CBO sees debt as a share of GDP rocketing from around 70% today to 250% of GDP by 2035. That’s a recipe for a debt crisis sooner rather than later. We might not have time for Klein’s sci-fi Singularity to save us.
So what does Klein think Washington should be worried about? “Catastrophic climate change” for one. Yet the same forces that Klein suggests might make all our debt problems go away also apply to the environment. There might be stunning advances in climate geoengineering and other technologies allowing us to vacuum up all that nasty, excess carbon. And with gobs of innovation driving economic growth, we’ll have a lot more dough to pay for Medicare, right? Unless, of course, we get a debt crisis way before 2080, and the U.S. shift into slow-growth mode.
Americans should worry about the deficit and ballooning national debt. They should embrace politicians who want to reform entitlements while also reforming the tax code so that it better rewards investment and innovation. And there’s no time like the present to get started.