Time Magazine made the smart decision to put its dumb cover story about the national debt behind a paywall. The premise — the national debt is like household debt and should be considered as if it’s apportioned equally to every U.S. resident — is stupid on its face. But Matt O’Brien has read the thing because nobody else will, and it’s even worse than its premise:
The government can borrow for 10 years at 1.77 percent, for 20 years at 2.16 percent, and for 30 years at 2.58 percent. It’d be hard for those to get any lower. And that’s what makes Grant’s debt doom-mongering not just wrong, but world-historically so. Think about it like this. The reason we care about the debt is that lenders might. In other words, if the debt got to be too big a share of the economy, then investors might demand tougher terms to make up for the fact that we looked a little riskier. Reducing the debt, then, is about reducing interest rates. Indeed, that was the rationale behind Bill Clinton’s big deficit-reduction package in 1993. But that’s impossible when interest rates are already as low as they can go, like they are now. So what would be the point of cutting the debt?
Easy: cutting the government. That, more than the debt, is what Grant really cares about. You can tell by the fact that his solution to what he thinks is too much red ink is … a big, fat tax cut? Actually, yes. “Are we quite sure,” he asks, that “we want no part of the flat-tax idea?” What he doesn’t say, though, is that if you’re going to cut taxes by, say, $8 trillion over 10 years—that’s how much Ted Cruz’s flat tax would cost—then you’re going to have to get rid of a lot of the government to bring the debt down. So goodbye Social Security, goodbye Medicare, goodbye Medicaid, goodbye Obamacare, and probably goodbye food stamps and unemployment insurance, too. (The actual debt is $19 trillion, but that includes obligations we owe ourselves, like Social Security.)
When you’re considering a flat tax, it’s not because you care about the national debt, it’s because you think wealth needs to be massively redistributed upwards, with the debt as the tissue-thin pretext.
…as Warren Terra notes, the Sultan of Shrill has more, and it’s outstanding.