Seeker Blog

Congressional testimony by Council on Economic Advisors chair Eddie Lazear included this chart of the ratio of publicly held debt to GDP. This makes the point very concisely that economic growth is the key parameter. Here’s a test we should give to every elected representative — as Steve Conover puts it:

The three different ways to fix the so-called problem of deficits and debt are: 1. Increase tax rates., 2. Cut spending. or 3. ______________.

I’m sure you didn’t have to think very long to say “Grow the economy:”

…That’s the choice we rarely if ever hear about, especially during political campaigns. [It’s more accurate to say “grow the economy at least as fast as the debt grows”—but political campaigns rely on sound bites and bumpersticker-length slogans, and we’ll be lucky to see the three-word version in anyone’s talking points any time soon, let alone the fully-qualified version.]

“Growing the economy” means “creating more and better jobs that yield higher and higher pay.” Growth is the third way to “fix” deficits and debt, and it’s a much better fix than spending cuts or tax rate hikes, for a number of reasons. “Fiscal responsibility”—a term nobody takes the time to define today—could at long last take on a very precise definition that would force both sides to bring economic growth into the debate:

Fiscal responsibility - The fiscal budget which results in no increase and no decrease in the ratio of debt to Gross Domestic Product.

Nonetheless, growth remains the well-kept secret. Republicans mention it only rarely, usually opting instead to talk about spending cuts. Democrats almost never mention growth; they’d rather focus on tax hikes for the undefined “rich” (…don’t tax you, don’t tax me, tax the guy behind that tree). Just listen to the speeches; “growth” is barely in anyone’s vocabulary.

The above chart stops at 2012, before the trainwreck of entitlements.