Phantoms in the Dark

I’m writing again on the issue of public debt, and so are many others on economic blogs (here and here and here and here and here and here  and here, and each of these has other links to follow), and on political websites (here and here , and many, many more to come).

The political voices are all clear: we are facing certain DOOM!!  Then END is NEAR!!!  Our national debt is so immense that we cannot escape the impending disaster unless we act, with radical abandon, to cut our deficits now, without delay.  The Paul Ryan budget plan passed by the House of Representatives as their 2013 budget plan (available here) says:

“This budget offers a blueprint for safeguarding America from the perils of debt, doubt and decline.”  

Holy cow!  Peril, and doubt, and decline!  And it says:

“For years, bad policies advanced by both political parties have contributed to an irresponsible build-up of debt in the economy, and this debt now poses a fundamental challenge to the American way of life.”

The report from the National Commission on Fiscal Responsibility and Reform (the Simpson-Bowles plan, available here) was titles “Moment of Truth”, and states in its preamble:

“Our challenge is clear and inescapable: America cannot be great if we go broke. Our businesses will not be able to grow and create jobs, and our workers will not be able to compete successfully for the jobs of the future without a plan to get this crushing debt burden off our backs.”

Crushing.  Not just any debt burden, but one that will crush us. 

Terror!  Terror, and we must, we must, we must! 

We must what?  We are being herded by the threat of terrible phantoms, always just out of sight in the dark woods around us, herded toward the adoption of radical change, herded by distant voices filled with dread, voices of one group or another calling out, terrified in the night, terrified about the future they see if we don’t adopt their plan, and reject all others.  We must raise taxes right now, or we must cut taxes right now, or we must cut social programs to the bone right now, or whatever.  Cut research, since it doesn’t have an immediate reward and so we can’t afford it; or cut defense because we don’t need to spend money on all those foreign wars.  Impose a different kind of national tax (sales, value added).  The compromise position is to do all of those things at the same time, even though each of these options takes us in a different direction. 

But any radical change has its own dangers, and its own costs.  We are being asked to make difficult and risky choices which will change our lives, and the lives of all of those “future generations” we hear about.  If we change the nature of Medicare, or of Social Security, that will effect future generations.  If we fail to maintain our national infrastructure, that will also effect future generations.  So the question of what the debt will do to us matters.  We should not make radical decisions while we are consumed with panic.  We need to understand this issue before it drives us to make decisions that hurt us from a dread of something that may not.

And if you follow the links to the economic blogs, you’ll find a range of opinions on what the impact of debt on the future might be, all of them with long histories and held by very smart, highly educated scholars.  It’s worth taking some time to understand them, and figure out which theories apply to our situation right now.   

The solution to night terrors is daylight.  So I’m going to try to find some.  If I don’t finish the task in the current blog post (I won’t, it’s late) then I’ll continue in the next, and the next until I get to the other end of what I need to say.   

Because we need to stop running at full tilt in random directions, smacking into each other in the dark.  Someone is going to get hurt.