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National Debt

5 min read

Part of Taxes, spending and debt.

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Every episode (4)

Who argued it

Chris Edwards · Ivan Eland · Peter Suderman · Gary Johnson

Fiscal Policy · Tax Policy · Trump Administration · Medicare · Inflation · Foreign Policy

Background

The debt as a security threat

In a January 2017 episode, Bob Zadek introduced the national debt as the subject of “national security in the most profound way but has nothing to do with armaments,” describing it as the greatest non-military threat to the country’s security The Return of Big Spending Republicans? (2017). His guest Ivan Eland, identified as a senior fellow and director at the Independent Institute, supplied the mechanism: national security requires money, and money buys tanks, missiles, Navy ships and Air Force aircraft. Eland distinguished the deficit, which he called the flow, from the debt, the stock into which each year’s deficit accumulates, and put the debt at “almost $20 trillion.” He cited Mike Mullen, whom he described as a former Chairman of the Joint Chiefs of Staff, as having said the national debt was the biggest threat to national security, and noted that the current Defense Secretary had said something similar while still not wanting to cut the defense budget. Eland argued that the debt drags the economy, that growth rates had been slow since the 2008-2009 recession, and that a growth gap of a couple of percentage points with China could make the United States a second-tier power.

A year earlier, in October 2010, a guest told Zadek’s audience that 43 cents out of every dollar then being spent was borrowed and that the country was bankrupt, warning that without significant reform of Medicaid, Medicare, Social Security and defense spending, and without radically reduced spending, the currency would be worth nothing A Better America (2010). The same speaker described developed countries throughout civilization imploding because they spend more than they have.

Figures and definitions

The episodes record the debt figure moving across episodes. Eland’s “almost $20 trillion” in January 2017 is followed in March 2019 by a discussion in which the debt is put at 20 trillion and the annual deficit at around 800 billion, after the guest corrected a host who had confused the Reagan-era deficit with the debt David Henderson on Trumponomics, Deficits, and Immigration (2019). In that exchange David Henderson observed that the U.S. government had kept revenues at around 17 to 18 percent of GDP for roughly 65 to 70 years, that revenues approaching 20 percent had preceded tax cuts at the end of the Carter and Clinton administrations, and that a value-added tax would breach that range and move the country toward European levels of taxation. He pointed to Western Europe after the mid-1960s, when countries adopting a value-added tax diverged sharply from the United States in government revenues as a share of GDP.

By January 2020 the figure had changed again: Jonathan Bydlak, described as founder and head of the Institute for Spending Reform, said the national debt was “now over 26 trillion dollars” Rethinking Afghanistan with Jonathan Bydlak (2020). In the same episode Zadek called the country’s spending “a spending binge never to have been seen before on this planet,” questioned whether the structure of government made it sustainable, and asked whether there was a point at which “the chickens, as they say, will come home to roost.”

The politics of spending

Bydlak’s account of congressional receptivity is the episodes’ most concrete treatment of why the debt persists. He said polling data showed reducing spending polling highest among Republican voters, that concern about increases in the national debt and growth in government consistently had the highest level of support, but that the issue did not evoke the most passion compared with hot-button topics Rethinking Afghanistan with Jonathan Bydlak (2020). He attributed members’ behavior less to bad motives than to the impossibility of expertise across everything the government does, which pushes them toward shortcuts such as following party leadership or what is politically expedient. He also said the war in Afghanistan, the longest war in U.S. history, was the 8,000-pound gorilla within defense spending, and that calling it a war was a misnomer because war requires a declaration by Congress and a president’s signature.

Eland’s account of the politics was blunter: no election was ever won on a budget deficit, because people like government benefits but are content not to pay for them, and they want taxes cut while keeping the services The Return of Big Spending Republicans? (2017). He noted that deficits had been large during the Reagan and George W. Bush years, and that Republicans go soft on spending reductions.

Across episodes

The topic recurs from 2010 to 2021, and what changes is chiefly the number: 43 cents of every dollar borrowed in 2010, almost $20 trillion in 2017, 20 trillion with an 800 billion deficit in 2019, over 26 trillion in 2020. The diagnosis — borrowing, entitlements, defense, political incentives — is stable across guests; the episodes show no development in the proposed remedy beyond Henderson’s argument against a value-added tax and Eland’s call for surpluses to pay down the debt.

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