It’s nice to see the federal debt finally starting to get some attention. One is sort of left to wonder why it took so long, but better late than never.
Indeed, the debt has become a new cause celebre in financial circles. Jamie Dimon, CEO of JP Morgan weighed in recently (which probably surprises no one), warning that the roughly $34 trillion in debt would precipitate a market “rebellion.” He warned that “it is a cliff (and) we’re going 60 mph toward it.”
Some would say it’s more like 160 mph, but that is probably splitting hairs.
The CEO of Bank of America was similarly earnest, encouraging us all to “get after” the problem, and “do something about it” rather than “admiring it.” Federal Reserve Chairman Jerome Powell recently encouraged us to have “an adult conversation,” about the topic.
Even some professor no one has ever heard of said something about it last week. When major publications are printing the comments of unknown academics, then you know things must be getting serious.
To all of them, I say: Welcome to the discussion. Glad you finally saw the light.
Back in 2013 — while tea party deficit hawks were literally begging people to take the debt seriously — Wall Street was one of the loudest voices parroting big-spending Washington talking points about not using the debt ceiling for leverage in the spending debate.
Phrases such as “We can’t afford not to raise the debt ceiling” were regular staples on financial talk shows. (Spoiler alert: Statements prefaced with the words “We can’t afford not to…” are a leading cause of crippling debt.)
While Powell’s input is certainly welcome, he inherits a post which, when held by Janet Yellen, was incessantly cheerleading for more government spending. Just prior to her accession to the chair, in 2013, Yellen commented that fiscal policy was a “headwind,” as she bemoaned “austerity” in federal fiscal policy. At that time, quantitative easing and a zero-interest-rate-policy dramatically but only temporarily reduced the cost of the money the federal government was borrowing. How much easier to borrow-and-spend, it seems, when that borrowing costs practically zero.
The deficit in 2013, by the way, was roughly $680 billion. And that was the first year our total debt exceeded our total national income. That year, we borrowed about 25 cents of every dollar we spent, Which is almost exactly the same as this year.
Anyway, don’t get me wrong. We debt-hawks don’t blame corporate CEOs for wanting the government to spend more back then. It was, after all, good for them and their shareholders. Similarly, Janet Yellen was shilling for Barack Obama in 2013, so spending more was certainly aligned with her party’s agenda. Washington is very much a “What have you done for me lately” town. We just hope that all of this newfound fiscal conservatism will help fix things.
The problem is that that looks outrageously unlikely right now. While corporate leaders and some academics may have woken up to the threats the debt presents, most voters have not. Recent polling shows that the debt is still in the low single digits when it comes to priorities for voters. That places it behind inflation, immigration, health care national security, jobs — even climate change.
At least it is ahead of criminal justice reform.
You don’t have to look much farther than the current national presidential discussions to know which way the wind is blowing on spending. Neither Donald Trump nor Joe Biden seems very interested in cutting. In fact, they seem affirmatively uninterested, refusing to even raise the issue. Only Nikki Haley seems to care much about it, and we can see how far that is getting her.
The bottom line is that until voters decide government spending, deficits, and the national debt matter to them, they won’t matter to lawmakers. As one high-ranking Republican senator once told President Trump, in dismissing the budget that I wrote in 2017 (it would have dramatically cut spending and eventually balanced revenues and expenditures), “Mr. President, no one has ever lost their job in this town for spending too much money. Lots of folks have for not spending enough.”
It is axiomatic that Washington does not lead, it follows. Until voters start caring about federal debts, most elected officials won’t care, either. And on behalf of fiscal hawks everywhere, we welcome the newfound fiscal conservatism of our Wall Street, academic, and policymaking brethren.
We just hope it isn’t too little, too late.
Mick Mulvaney, a former congressman from South Carolina, is a contributor to NewsNation. He served as director of the Office of Management and Budget, acting director of the Consumer Financial Protection Bureau and White House chief of staff under President Donald Trump.