A thought on the Debt Ceiling nonsense:
“This impasse is not about debt. When America’s debt to GDP ratio went up by 40% to bail out Wall Street, the Republicans did not even squeak.”
A similar thought, left by a friend years ago on my old blog:
“A large portion of public sector debt was recently absorbed [from the private sector] by the public sector.”
To me, these are statements about the hypocrisy of the players in the game of risk that we call "the debt ceiling crisis". The practice of claiming to have moral standards or beliefs to which one's own behavior does not conform, the dictionary says; pretense. Sounds right to me. Hypocrisy.
By the way, you can see it happen: Everything goes along normally,
right up to the end of 2007. Then suddenly, in 2008, everything changes
direction. The increase of financial debt suddenly drops off, and the
increase in the federal debt surges as the government steps in to limit
the severity of the collapse:
 |
| Graph #1: Annual Change in Federal Debt (red) and the Financial Sector (blue) Note that debt is measured as end-of-period values. Everything looks fine, right up to the end of 2007. Then suddenly, in 2008, Finance cuts its losses and the government has to step in to limit the disaster. |
The
vertical gray bar represents the recession. Financial sector debt
(blue) drops from near a 15% growth rate, to zero and below. Maybe
we should call that a "shrinkage rate".
Now, we can't know for a fact what would have happened if the government didn't step in. But it is clear to me that it would have been a disaster, like the Great Depression that my dad lived through, and his parents. My dad was ten years old when that Depression hit.
We can't know for a fact, because this time that fact didn't happen. But our economy was bad for years after the recession shown on the graph. We still had not recovered, we still were not back to "normal" even by the time of covid. Remember people talking about "the new normal"? That's not the same as normal. We never fully recovered.
It had to be done. What the
government did, it had to be done. Could it have been done better? Of
course, but that's not the question.
And now, after the financial crisis and the disruption that followed, and after the covid pandemic where, similarly, the response was necessary if imperfect, now there are tantrums in Congress. Now the government is held up as irresponsible for doing the responsible thing.
Now, the federal debt is held up as evidence of irresponsibility. Hypocrisy is exactly the right word.
I tripped over Nanute's observation, went looking for more, and found Yanis's statement. They are right, you know. Yes, the federal debt was high even before covid and yes, high even before the financial crisis. But nobody is subtracting the government's responses to those problems from the federal debt. No one is making allowances for those emergencies. No one is just trying to be decent.
Let me say yes, our federal debt is a problem. Yes it is. But for me, the problem is not that that the debt causes, well, whatever it is the tantrum people say it causes. I don't accept those stories. For me, the federal debt is a problem because we cannot stop the increase, not even briefly. We are not in control of it. I am tempted to say that the economy has a mind of its own, and it is making the federal debt increase... and nobody believes that the economy has a mind of its own, so nobody can figure out what must be done to stop the increase.
It's almost like we refuse to listen to the economy. We refuse to try to understand it. We know the economy is bad and that is all we know. And, you know, I think maybe this obtuseness on our part is what spread to the political world so that now we refuse to listen to each other. We refuse to try and understand each other. We know those guys are assholes and that is all we know.
And that seems to be the only thing the two sides agree on.
My view of the Debt Ceiling discussion is this:
Our
economic problems are not caused by the Federal debt. Debt other than
federal is the cause. Excessive private-sector debt is the cause of our
economic troubles. If we reduce private-sector debt so that the economy can grow, the federal debt will come down easily.
Our economic problems are not caused by the
Federal debt and deficits. Balancing the Federal budget will not solve
the problems. Therefore, the whole "debt ceiling" argument is
irrelevant.
Irrelevant.
Nanute's view, and Yanis's, is that the move to limit federal spending by such a drastic measure is blatant hypocrisy.
These two arguments are the strongest of all the arguments against the Republican tantrum nonsense. Hypocrisy and irrelevance.
That about sums it up. Hypocrisy and irrelevance.
No comments:
Post a Comment