Wednesday, January 19, 2022

That’s Crazy Talk!

Senator Joe Manchin (D., W. Va.) waves while walking outside the West Wing of the White House in Washington, D.C., November 18, 2021. (Kevin Lamarque/Reuters)

Jordan Weissman has a lot of bad ideas. Today, he shares another one: trying to repackage Build Back Better as a deficit-reduction plan. He offers this aside: “Democratic aides have semi-jokingly told me that [Senator Joe] Manchin would probably be happiest with a bill that just raised taxes and put the money toward debt reduction.”

Jordan Weissman, again, has a lot of bad ideas. Democratic aides apparently think a reasonably good idea — reducing the debt by reducing the damned debt — is a joke, or a semi-joke.

There are really three things that can be done to mitigate the debt in practical terms: 1. raise taxes; 2. cut spending; 3. accelerate economic growth. Politicians always prefer No. 3, because it doesn’t involve doing anything difficult, but No. 3 has been tried and tried and failed and failed — it is theoretically possible to hold deficits at a relatively low level so that GDP growth outpaces debt growth (meaning that debt gets smaller as a share of GDP, the most important metric), but the United States has not been able to do that in a sustained way. It is wishful thinking to pretend otherwise.

The best way to proceed would be a combination of Nos. 1 and 2 (while thinking very hard about No. 3 and rubbing a lucky rabbit’s foot in our national pocket), which is probably what we will end up doing once we have exhausted all the other possibilities — as Canada did in the 1990s.

The worst way to reduce the debt would be attempting to impose a radical new regime of subsidies and regulations as part of an effort to reorganize seven or eight major economic sectors (utilities, manufacturing, transportation, agriculture, etc.), along with labor markets, world trade, and our entire international-relations agenda for the purpose of marginally reducing carbon-dioxide emissions at some point in the next several decades in the hopes that this will have a meaningful positive effect on climate worldwide.

If that is your agenda and you think that raising taxes to pay down the debt is crazy talk — a joke — then maybe it is time to reconsider your priors.

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