Can the proposed bi-partisan commission on government debt really have an impact? In this audio clip from NPR, Cokie Roberts claims no, but only because voters don't consider the debt a "huge crisis" at this time. I disagree; the popularity of Ross Perot is indicative of how many people considered the debt a serious problem way back then. It's only gotten worse since.
I have a different take: The commission will fail, but only because, as Bastiat aptly noted 150 years ago, "government is the great fiction through which everyone endeavors to live at the expense of everyone else." Too many voters are of the opinion that, "I don't like the debt, but my favored programs best not be cut." Consequently, politicians are unwilling to make serious and necessary cuts to government programs, and the debt grows larger. Tax increases won't do it, and are likely to make matters worse if marginal tax rates are high enough to induce people to consume more leisure.
As long as politicians can borrow from the future in order to keep voters today happy by offering publicly provided largesse, don't expect any change in the debt. It's not the politicians' fault, they're just doing the bidding of the voters.
Comments