The cover of the venerated publication’s newest issue sports a shocking warning with an all-red klaxon cover that shouts: “DEAR READER: You owe $42,998.12.” The article in question, by gold-standard quack and dad-bod analyst James Grant, argues that America’s national debt is so large that our government must stop spending so much money.
This is false. The world’s investors continue to give us their money for historically low prices. The national debt never has to be repaid in the credit card-style manner the cover implies. And trying to do so would be economically disastrous for the entire world’s population, both the tiny fraction who are rich and the many billions who are clawing for a dignified life.
Putting that cover on newsstands in 2016 is the journalism equivalent of Ted Cruz’s campaign dressing up its fundraising emails as formal past-due notices. It’s a simple con: Alarm the eye, shock the brain, and collect a few nickels from the stunned rube who falls for it.
Publishers playing tricks to grab a quick buck is nothing new, and it won’t go away. But unlike Buzzfeed blowing up watermelons on Facebook or your local TV station inciting a germs panic on the 11:00 news, what Time’s doing here isn’t a victimless crime. Debt hysterics are dangerous – deadly, even.
Panic about the size of the national debt has undermined the country throughout the entire Obama presidency. After a cataclysmic financial industry collapse caused by very rich people in very expensive suits, a new round of well-heeled liars conspired to ensure that the nation’s economic recovery would be devastatingly slow and feeble.
In late 2008 and early 2009, it was obvious that the government needed to spend like hell to save the country from an outright depression. Official government forecasts showed a looming economic output loss of more than $2 trillion, and independent analysis suggested the problem was even larger.
But rather than enacting a $2 trillion injection of public stimulus, debt hawks insisted on something much more modest. The White House obliged, proposing less than half of what official forecasts would have required. White House economist Christina Romer fought for a much more ambitious package, lost, and quit the administration a little over a year later.
The debt panickers had won. With that victory under their belt, they got bolder – and Democrats got craven.
CNBC talking head Rick Santelli’s live-tv rant in 2010 that’s often credited with launching the Tea Party? At the surface he railed about specific spending policies and banker-friendly notions of fairness. But like the movement it sparked, it was fundamentally animated by debt panic.
The debt-whiner Gadsden flag crowd delivered the 2010 election wave that gave John Boehner the Speaker’s gavel, ensuring the legislative death of every Obama priority that hadn’t been finished yet. The media’s tendency to chase whatever is shiniest ensured that the Tea Party phenomenon dominated political conversations that spring and summer.
Democrats up for re-election that year decided they couldn’t push back against the fundamental economic errors underlying the debt fervor. Instead, they ran away from anything that even smelled like a spending bill.
Almost all of them tried to downplay their votes for the stimulus package, quietly validating the incorrect notion that the bill had been too big. That of course did nothing to stop the hundreds of thousands of attack ads that smeared the Recovery Act as a debt-laden boondoggle.
Many Democrats even asked President Obama to stay away from their districts – even though the new president’s personal popularity among Democrats likely would have helped many of those defeated House members to keep their seats.
After the 2010 “shellacking,” the White House itself made a similar strategic error by entertaining the debt panic that had empowered the same Republicans who began sabotaging the economic recovery starting at the very outset of Obama’s tenure. Obama appointed a bipartisan commission to gin up ideas for reining in a supposedly-runaway national debt. It didn’t matter that the commission’s most damaging ideas never became law. The signal was clear: No blue states, no red states, just purple states where everyone agrees that The Debt Is A Problem That Must Be Solved.
With Boehner installed as Speaker on the crest of a debt-panic wave, a fiscal game of chicken became almost inevitable. To resolve it, the White House ended up agreeing to the disaster known as sequestration.
The entire point of that exotic policy mechanic was to force hardline Republicans to back off of their budget-cutting obsession. It only sort of worked politically and didn’t really work on a policy level. It did not prevent Boehner from triggering a disastrous government shutdown.
Sequestration cuts hampered all manner of material public services: Job training programs, domestic violence shelters, housing support systems, health services for American Indians, food programs for seniors, and the system that keeps poor people from freezing to death in the winter all felt the squeeze, as did longer-term investments in things like scientific research and pre-school programs.
The debt panic didn’t just install Republican majorities. It caused substantive harm to millions of Americans who already live in precarious economic situations even when government programs are fully funded. It kept unemployment higher for longer than was necessary, prolonging the recession – and arguably causing thousands of premature deaths.
As ugly as American politics have been in 2016, this election cycle also suggests a partial reset in how fiscal policy questions are framed. Years after the primary academic argument in support of the debt whiners was permanently debunked by elementary errors in both methodology and philosophy, spending isn’t such a dirty word.
An avowed Democratic Socialist is running on a massive spending platform designed to deliver public goods to hundreds of millions of people, and forcing an established center-left Democrat to dig in for a much longer primary battle than she expected. One of the most influential Democratic senators routinely pushes for ambitious investments in things like retirement security and higher education, suffering no political damage as a result.
Time Magazine wants to take America backwards from this fragile new willingness to entertain the idea that the world’s richest society might be able to buy its poor people some nice things. To do so, it’s paying Ron Paul’s favorite whackobird to sell readers on the fiction that the national debt is going to come due in some immediate, personal way for individual Americans.
Now, we get to find out if the political media and the Democratic establishment will once again cave to the same con that derailed the Obama presidency. Buckle up.
Author: Alan Pyke