Streams

30 Issues: Is The Debt Really A Crisis?

Tuesday, September 25, 2012

30 Issues in 30 Days is our election year series on the important issues facing the country this election year. Today: The actual significance of the national debt and how it might play into the election. Visit the 30 Issue home page for all the conversations.

Open Prep: Questions, Articles, and Links to Get You Started

Key Questions

  • Is debt the central issue to our time, or a Tea Party distraction?
  • What can we learn from the European Debt Crisis to avoid a similar situation in the U.S.?
  • Is it time to revisit the Simpson-Bowles Plan? 

What are your key questions on this topic? Post them below and get the conversation going!

Guests

  • Alice Rivlin, former White House Budget Director and Federal Reserve vice chair, Brookings senior fellow, member of the president's deficit commission and co-chair of the Bipartisan Policy Center (BPC)'s Debt Reduction Task Force
  • U.S. Rep. Jan Schakowsky (D-IL 9), dissenting member of the Simpson-Bowles deficit reduction committee.

30 Issues Interactive from WNYC Data News | Archive of Interactives

 

Links

Try the interactive game Budget Hero at the Wilson Center

 

Got a Follow Up?

Each Friday we'll be following up on one of that week's issues. Got a particular follow-up question from this conversation? Comment below or tweet us. Tweet to @brianlehrer

News, weather, Radiolab, Brian Lehrer and more.
Get the best of WNYC in your inbox, every morning.

Comments [46]

Audrey Irvine

We cannot discuss the deficit until we have an understanding of where debt comes from and how money is created. I haven't heard anyone talk about the implications of having all our money created by banks in the process of making loans. 97% of our money is made this way and if we decrease our debt we will be decreasing our money supply de facto going into a depression. The issue is rewriting the rules for the system. Don't let the banks including the Fed create our money and loan it to us at interest. BY the constitution we can create our own money, interest free. If we don't ground this discussion in how money is actually created we will fail in our efforts. This isn't just an issue of taxes vs cutting programs!!! The issue is much larger and has been a huge issue in other times in our history. Take the power away from the banks. A final note: No one is talking about the natural tendency of capital to concentrate into the hands of the few under capitalism ( see Graeber "Debt:The first 5 thousand years"). Hence Old Testament Jubilees. We need a large system perspective to make the correct choices.

Oct. 24 2012 05:17 PM
Michael Z from Manhattan, Upper Eastside

The government should cut back defense and increase taxes. The Bush tax cuts obviously did not help the economy at all. Who cuts taxes and starts two wars at the same time. The $300 billion defense cut savings would of course be offset somewhat by the increase in unemployment payments since defense is a massive government program. This happened in California during Clinton's Administration with the peace dividend. Also, Uncle Sam needs to increase taxes a few $000 billion on the rich. How about a flat tax to close all these loopholes Romney and others get away with. (Romney's 2011 tax was 15.3% while mine was 16.5% - I'm a civil servant retiree). We had very few deductions other than the standard one and our very high New York State income tax deductuon). Voters need to have dialogue between Obama and Romney to figure out how to handle the $61 TRILLION in unfunded entitlement liabilities the federal government has run up. This number dwarfs all the possible defense cuts and tax increases we could possibly implement. There are newspaper and TV conservative republican columinists like David Brooks writing in New York Times and having the courage to bring this issue up. This should be the main discussion of the Presidential debates.

Sep. 25 2012 09:26 PM
NABNYC from SoCal

The debt is a crisis in the sense that our economic system is out of whack. The rich take more and more of the nation's wealth for themselves and pay very little in taxes because they bribe our politicians to pass laws which allow them to avoid paying taxes. The majority of the people have wages frozen at 1970 levels, and can no longer afford to live on what they earn, so they borrow on credit cards at usurious interest rates. Bush-cheney started wars in the middle east which further depleted our treasury. Our communities can no longer afford to provide citizens with the basic services we need to be a decent society, such as schools, parks, fire, police, healthcare, emergency services.

The biggest problem in our country is the "free" trade treaties which have taken good paying jobs out of the country and allow unrestricted imports from other nations. We need to rescind the trade agreements and ban the import of all necessities, ban the import of foreign workers (h1b visas), and pass a full employment law to guarantee that all Americans who are willing and able are fully employed. We also need to radically increase taxes on the rich and eliminate the capital gains preferential tax rate of 15%, plus reinstate the estate taxes on estates over $1.0 million. If we do that, we can reinvest in our own country, pay off the debt, and make this a good place to live for our own citizens. If we don't do that, we are headed to third world status with the poverty, despair and violence that accompanies that condition.

Sep. 25 2012 02:41 PM
Edward from Washington Heights AKA pretentious Hudson Heights

The US should set a withdrawal date.

A date when the US will no longer import oil from the Middle East. That will hurt the petro theocratic dictatorships where it matters.

The US needs to develop domestic oil and other energy supplies ASAP.

Sep. 25 2012 01:27 PM
Martin Chuzzlewit from Manhattan

TAHER......

AREN'T YOU GLAD THAT MOM AND DAD (if there was one) got you that computer for your birthday?

Wheeee...what fun!

Sep. 25 2012 12:53 PM
mejimenez from manhattan

Naomi Wolf's "The Shock Doctrine" documented how the chiefs of international financial management imposed austerity around the world by taking advantage of natural and manufactured disasters. The Friedmanite austerity program of privatization, deregulation, and dismantlement of the safety net is often called "the Washington Consensus". The Simpson-Bowles Grand Bargain, which Obama will implement Nixon-to-China style, is just the Washington Consensus coming home to roost.

Dr. Steve Auerbach: good list of references, but you need to add Michael Hudson (http://michael-hudson.com/)

Sep. 25 2012 12:41 PM
Zuwena from Manhattan

My God, this is beginning to get ridiculous Brian. Why do you ask guests questions and then let them slip away without answering. I'm still waiting to hear exactly what Romney offered with regard to his "point 3". What was the "meat" that your guest heard. I heard nothing except some attempts to define the populace that should be approached but not how the policy and practice would actually change.

Sep. 25 2012 12:09 PM
Edward from Washington Heights AKA pretentious Hudson Heights

A simple way to reduce the debt, President Obama, don't forgive Egypts $1 billion debt. Insist to Morsi that Egypts debt needs to be repaid. Egypt has oil revenue.

A BIG way to save money, $700 billion, get the US to stop imported oil from the Middle East, from the OPEC cartel.

Sep. 25 2012 12:04 PM
jawbone

How meaningful can today's chart be if there is no way to indicate WHICH programs would be cut?

Serious question.

The R's have been dying to cut into and maybe cut away entirely SocSec ever since it was proposed (by TR, first? but esp'ly by FDR). And Medicare? All that money just going to keep older people healthy and ameliorate their ills? Damn, if only private business parasites could suck up their share in profits. That's the R dream. Posssibly shared by too many D's.

I think making the age for Medicare higher and cutting SocSec effective payments would be a disaster going forward, with ever more people falling into poverty in their older years. And, of course, where are the ice floes when we'll really need them?

BTW, most of my time right now is spent visiting and working to take care of the emotional and business needs of a very good friend. He was just about ready to go on SocSec, at the new advanced age, and was struck down by a stroke. Vision screwed up, short term and many older memories screwed up, physical deficits, deep, oh so deep, depression. This was what this person, thin, careful about his diet, well exercised, feared most as an illness.

But he lives -- so he'll still be a moocher, according to Ryan and Romney. Since he was employed, he'll not only suck at the private insurance teat but at the Medicare teat as well. Depending on how rehab goes, he may end up on Medicaid at some point, once his savings are gone....

But how could this happen? Since the R's and many D's say everyone now can work until his or her 70's??? Gee, statistics aren't real people, eh?

But statistics do point out that poorer, working class people are beginning to have shorter life spans, while it's the wealthier are living longer. Yes, actually dying earlier than their cohorts of a few years ago. But only the poorer among us. Lower economic quintiles.

But do R&R and their party give a damn about that?

Does Obama?

Corporatism despoils many a decent person in today's politics. It seems to have made a leveraged buyout of much of the Democratic Party, alas.

Sep. 25 2012 12:04 PM

Thomas Pinch~

I take that back; PSYCHOTIC, instead!!

Sep. 25 2012 11:59 AM
jgarbuz from Queens

To John A

I'm usually alone, but I am rarely wrong.I've predicted big things since the 1950s, MOST of which came true. I won't go through the list, as it is too long and don't want to be boastful, but I have been eerily prophetic over my 66 years of life. Unfortunately.

Sep. 25 2012 11:51 AM
Em

I don't know if Rivlin is willfully ignorant or just disingenuous, but how she can say the answer to health care costs is more competition is to ignore how private systems operate and how health care works. She also keeps implying that there is currently no competition within Medicare; almost all Medicare services are provided by competing companies, companies that collectively delight in finding innovative ways to extort government funds. Trying to control these many and varied entities at all levels is one of the most expensive administrative aspects of Medicare. When these companies are shown to be fraudulent (which all of them have been at some point) the fines imposed are ridiculously small and viewed by these companies as just part of doing business.

She is merely protecting her own personal interests; it is the revolving door system between politicians (& their administrators) and the very companies they are supposed to ensure are performing legally and ethically that is at root of all our current problems. Unfortunately much of the corruption is not even illegal, and that fact alone should give us all pause for thought.

Sep. 25 2012 11:50 AM
jgarbuz from Queens

To Taher

If the US ever does lose a major war, whether it be to Fascists, Communists,Islmaofascists, or whomever, it will definitely be stripped and looted! Of course. Is it likely? Probably not. But one can never say never.

Sep. 25 2012 11:48 AM
John A

Jgarbuz, History will tell. I believe we are above Zero population growth, so you're looking pretty lonely at your position at present.

Sep. 25 2012 11:48 AM
jawbone

I'm pretty sure Alice Rivlin is suffering from Corporatist Capture -- she's so exposed to only people who think Big Bidness can do no wrong, or just a bit here and there like pulling down the entire economy, that she can't see that the Simpson-Bowles plan makes the lower economic quintiles pay yet again for the really rich's tax cuts, for the first payout to them, and now pay for the debt created by those tax cuts, among other things, for a second go round of the poorer paying to make things whole, with the rich staying richie rich.

Sep. 25 2012 11:46 AM
Taher from Croton on Hudson

jgarbuz from Queens, here you go again, another primitive argument. What’s good for goose is good for the gander. If America looses a war in the future then America, as looser, must pay war booty. Right?

Sep. 25 2012 11:46 AM
Karen from NYC

Just a note that, in my Law & Literature class last night, we discussed Davy Crockett, 19th-century populism and the evolution of the American "folk hero." While in Congress, Crockett opposed the funding of West Point, which he regarded as a school for elites. His argument was that poor people were already paying a disproportionate amount of taxes, and fighting the nation's battles on the frontiers, while the rich enjoyed the benefits of prosperity.

So this is a long-time fight in our nation between haves and have nots, not one invented by Milton Friedman and Ayn Rand. The difference is that the 19th-C populists voted their own interests, whereas today's conservatives vote for the folk hero without considering who will pay for his policies.

Sep. 25 2012 11:44 AM
jgarbuz from Queens

Government can only create mostly non-productive jobs, but only private industry -especially small business - can produce profitable productive jobs that create WEALTH and hence tax revenues. Which is not to say that teachers and soldiers and police and firemen are not valuable assets to our economy. Without them we could not defend and secure our nation and economy. But only business creates profits and HENCE wealth and tax revenues. Not government.

Sep. 25 2012 11:44 AM

Thomas Pinch~

"...leap from reality..."???

Try deficient and delusional. As usual.

Sep. 25 2012 11:41 AM
Kate from Washington Heights

citation from guest on the quotation from Paul Ryan saying he supported helping people?

Sep. 25 2012 11:41 AM
Jennifer from Brooklyn

@Thomas Pinch, perhaps, but they are also not buying our treasuries at auction anywhere near the levels they had, I think this has more to due with QE, than anything else. Last thing the Fed needs is a failed debt auction.

Sep. 25 2012 11:37 AM
Thomas Pinch

ok, jgarbuz, you get the prize for biggest leap from reality on this thread. Unproved and unbelievable.

Sep. 25 2012 11:34 AM
Sheldon from Brooklyn

Debt is a problem but as long as the US prints its own money - for better or worse, something Greece and Spain could not. The true devil is the deficit.

Sep. 25 2012 11:34 AM
Thomas Pinch

ladyjay, that sounds very far fetched. you'll have to prove such an outlandish charge to have any credibility at all. You can't just say things and expect us to take it as fact.

Sep. 25 2012 11:32 AM
jgarbuz from Queens

Aborting 50 million babies did not help the US economy at all. It meant more reliance on immigration, legal and illegal, and fewer youth to work to support all the retiring "boomers." Instead of being "fruitful" and muliplying, we chose infanticide and old age entitlements instead.

Sep. 25 2012 11:31 AM

Chaolin from Manhattan ~

Yes, you are correct, However, they are STILL NOT "ENTITLEMENTS"!!!!

Sep. 25 2012 11:30 AM
Dan

Ryan is so full of it.
The most debt is due to Bush's tax gifts for the 1% while dragging the US into two unfunded wars. That's why they call him lyin Ryan.

Sep. 25 2012 11:30 AM
Taher from Croton on Hudson

The conversation by “experts” on this subject always revolves around America’s ‘entitlements,” and how to cut its cost. Little is spoken on America’s huge military spending and overseas foreign, aggressive adventurism, which is bleeding this country dry. How, in a stuck, economy, with more people loosing their standing in the middle can this nation support this huge military budget which is bigger then the entire world?
The cost of spending is over $700 billion per year and growing.

Sep. 25 2012 11:29 AM

Just to mention again, once you are on Social Security & Medicare you continue to pay a minimum of $1K a year in Part A/B & D insurance premiums + deductibles that increase each year more than the COLA benefit increase + co-pays for all services MD/Hospital/Part D Rxs + vision, dental & hearing needs are NOT covered by Medicare alone & some not even by Medicare & Medicaid combined.

Sep. 25 2012 11:29 AM
Thomas Pinch

Jen, "deversifying" is not deleveraging. They are smart to spread out their purchases, but that is different than saying they don't want our debt anymore at all. You're doing the same thing that you are blaming the right and left of doing, and that hurts your credibility.

Sep. 25 2012 11:28 AM
Chaolin from Manhattan

dboy, we do pay for them, but we take multiple more times out of them than what we ever put in...

Sep. 25 2012 11:27 AM

"then education is solution #1. educate the poor and they wont be poor for very long."

I completely agree... the only problem is that poverty is a business in itself. The people who profit from poverty aim to keep the poor uneducated.

Sep. 25 2012 11:25 AM

Social Security and Medicare ARE NOT "ENTITLEMENTS"!!!

We specifically PAY for these programs with VERY specific payroll taxes.

STOP CALLING THESE PROGRAMS "ENTITLEMENTS"!!

Sep. 25 2012 11:24 AM
Jennifer from Brooklyn

@Thomas Pinch -- google china's diversifying currency reserves. They don't find our currency to be a stable long term bet any longer, and are looking at a basket of currencies, gold, etc. Looking at our current parties I cant blame them. Why would you want dollar based assets, if the goal of the Fed is to print more money and devalue your holdings.

Sep. 25 2012 11:22 AM
jgarbuz from Queens

Re: the defense budget. In the ancient days, you paid for your military by taking war booty and slaves, assuming you won. We took Kuwait and too Iraq but took no oil for free as war booty. The wars cost us trillions, but we did not take trillions in crude out the soil of Iraq to pay for it when we controlled the Iraqi oil fields. If you are forced into war, and they you win, and you do not take war booty, then of course your military is just a cost burden and not an instrument for taking resources to pay for the wars.

Sep. 25 2012 11:21 AM
Thomas Pinch

or (c) that the infrastructure spending will hire people to do the work who will then have payroll taxes take out that goes into the fed' coffers to reduce the debt.

Sep. 25 2012 11:20 AM
Joe from nearby

@caller Antonios-
Great question/comment! Defense id the 600 lb gorilla in the room.
Bush took us into 2 wars & doubled the size of the military. Now we're getting out, but what does Mitt want? MORE $ for the military!

Huh?!

Sep. 25 2012 11:19 AM
Hugh Sansom

Alice Rivlin ignores the fact that the US military budget — even excluding war spending — has consistently grown at a faster rate than the rest of the budget for years.

If Rivlin wants to do something about health care costs, why not REGULATE insurers and big pharma? Why not allow Americans to buy their medications in Canada or Europe?

Sep. 25 2012 11:18 AM
jgarbuz from Queens

Debt is an issue only when you can no longer repay it. To repay a debt, you either have to spend less or work more or have some sugar daddy.
Regarding "infrastructure spending" you have to first prove that (a) you have the competent workers to actually be able to do the work you want done, and (b) you have to know how that better infrastructure will improve your overall productive capabilities so that the economy will actually increase overall national productivity.

Sep. 25 2012 11:14 AM
Tom from New York City


The biggest cause of the debt crisis is the bloated US military budget. With only 5% of the world's population, the US is responsible for 50% of the world's military spending. The US generates only a one-fifth share of the world's economic activity, so we would have to cut our military by two-thirds to make it reflect the average spending rate per national income. That is, our military budget would be only one third of what it is now, if we spent at the average national rate per person. Cut the military to a normal rate and make the retirement age just one year later and you'd balance the budget.

Sep. 25 2012 11:10 AM
Thomas Pinch

"...economic and social insecurity and inequality and loss of intergenerational class mobulity..." -- can you begin to tackle these problems with uneducated, poor people? if these are the #1 problems, then education is solution #1. educate the poor and they wont be poor for very long.

Sep. 25 2012 11:04 AM
Dr Steve Auerbach from New York, NY

"Federal Debt" is a fraudulent issue pushed by the wealthy and corporate as part of their selfish grab of wealth and power since the mid-1970s.

The number one problem and priority for the United States is economic and social insecurity and inequality and loss of intergenerational class mobulity. But the 0.1%, the Washington Consensus, the corpate media, 100% of the Republicans and 70% of Democrats are not interested in addressing these as the number 1 priority.

And even this disucssion on this show, and the constant drumming of it on most of the rest of NPR (e.g., Diane Rehm) is part of the problem.

See: Hacker and Pierson's book Winner Take All Politics; and pretty much anything by Krugman, Stieglitz, Dean Baker, etc.

Sep. 25 2012 10:53 AM
Thomas Pinch

"...since China does not want it anymore..."
Jen, I was with you until you started making things up.

Sep. 25 2012 10:44 AM

If they really want debt reduction, how about facing up to the real scary debt - 30 years of foreign trade debt due to shipping good jobs overseas & re-importing goods without customs & trade tariffs? Most of our trading partners have non-tariff market protections that we don't impose on our imports.

Shipping those jobs overseas has killed local economies & local & state tax bases.

No income cap + increased types of income subject to regular tax rates. No more tax benefits for shipping jobs overseas.

Sep. 25 2012 10:03 AM
Jennifer from Brooklyn

@RUCB -
Typical bury your head, blame the other guy, look at what the other-side did, to hell with the future lets win now attitude. I'm tired of this from both parties. Reality check, we are living on borrowed money (almost half of every dollar we spend). We have little growth; even though the yearly budget has grown to a trillion more per year than the horrible mess Bush left s with (and by the way, no defending Bush in anyway - he was horrible, but the housing crisis, bank deregulation, free trade with China, etc was spearheaded under the Clinton administration).

All this with near zero interest rates provided by the fed - by printing money and buying our own debt with it (since China does not want it anymore). If we don't get our collective heads out of our @#$, the standard of living will decline precipitously.

Sep. 25 2012 10:01 AM
RUCB_Alum from Central New Jersey

If US Debt reduction was so important to our Conservative citizens, why where they so eager to kiss it goodbye when Bush and the GOP steered the country AWAY from the budget surpluses that were projected to pay off the DEBT entirely by 2020? Why did they give back tax revenue WITHOUT putting in reasonable cuts to keep the budget in balance? Why did they start two military campaigns WITHOUT the revenue bills to support them? Why did they increase MediCare expenses without some reasonable set aside.

The current focus on the debt is just GOP rope-a-dope. When they are in control, "The debt is not that important, we can grow our way out of it...". When a Democrat is deciding how the borrowed money is spent,"The debt is too high and we must cut every non-defense program to end the give-aways."

At 24% of GDP, I would agree that government spending is too high but unless I see some reasonable proposals for getting more revenue - cut loopholes so that collected taxes from corporations is 15-20%, terminate cap gains rate on foreign investments, raise FICA cut-off amounts, etc. - I do not think the way back to balance is to cut, cut, cut.

Sep. 25 2012 09:47 AM

Leave a Comment

Register for your own account so you can vote on comments, save your favorites, and more. Learn more.
Please stay on topic, be civil, and be brief.
Email addresses are never displayed, but they are required to confirm your comments. Names are displayed with all comments. We reserve the right to edit any comments posted on this site. Please read the Comment Guidelines before posting. By leaving a comment, you agree to New York Public Radio's Privacy Policy and Terms Of Use.