U.S. Rep. French Hill and state Sen. Joyce Elliott didn’t seem to agree about much in their debate on Arkansas PBS Monday, except for one thing, which we’ll get to in a minute.
The two candidates are vying to represent Arkansas’ 2nd Congressional District, the state’s most competitive. Polls show the race is close.
Hill, the Republican, pointed to his support for the 2017 Tax Cut and Jobs Act, which lowered taxes for many Americans and lowered taxes quite a bit for rich people. Elliott, the Democrat, said the act was a giveaway to the rich.
The act definitely contributed to economic growth, which especially happens when you cut taxes but don’t cut spending and therefore borrow from the future. It was a contributing factor to the $1 trillion annual deficits we were running even before the coronavirus pandemic started. That’s unprecedented in a growing economy.
In fact, last fiscal year’s nearly $1 trillion deficit was 4.6 percent of the gross domestic product. That’s the difference between good times and a recession. The great economy wasn’t really so great. We were just living on borrowed money.
These yearly budget deficits added together create the national debt, which is now $27 trillion. According to the U.S. government’s Bureau of Economic Analysis, the gross domestic product for 2019 was $21.43 trillion. That means the United States now owes far more than it makes in a year. It’s not yet a crisis, but we’re headed toward a cliff with no U-turn in sight.
This year, in fact, we’ve stepped on the accelerator. The debt has increased $4 trillion since last Christmas – the majority because of the pandemic, but we were deeply in the red regardless. To put that into perspective, the national debt was $4 trillion on Sept. 30, 1992. In other words, not adjusted for inflation, the debt has increased more in the last 10 months than it did in the country’s first 203 years.
The two candidates next were asked about that $27 trillion. Elliott said the country should invest in its citizens rather than enriching the richest ones and said Hill wants to cut Medicare and Social Security. Hill said the economy should be rebuilt and reopened and said he does not support cutting Medicare and Social Security. He said the Tax Cut and Jobs Act had strengthened those programs because more people have been paying into the system.
Here’s where they agreed without saying so: Economic growth is the key to balancing the budget. Elliott’s focus was government spending while Hill touted his tax cuts, but both approaches are a tool to create growth.
They are hardly alone in this. The longstanding unspoken bipartisan agreement is that we can grow our way out of this. It’s great politics because it has the luxury of solving a difficult problem painlessly.
Except it won’t, by itself. The economy was growing in 2019, when we were running a $1 trillion deficit. At some point, hard choices must be made about taxes and spending.
Hill and Elliott didn’t talk about hard choices, which is understandable because they’re trying to win a campaign. Hardly anyone ever does other than when Ross Perot did it running for president in 1992.
But campaigns are exactly when we’re supposed to have these discussions. When the election process paints a rosy picture for the American people, it gets translated into policy afterwards. Expectations have been set. Promises have been made.
This pandemic is no time to be pinching pennies. We’re involved in a crisis, a worldwide tragedy, a time of great sorrow.
When this ends, a responsible country would mourn, rebuild, and at the appropriate time pay down the trillions it has borrowed. It would do it honestly by using today’s dollars to pay for today’s expenses. That means cutting spending for sure but also increasing taxes – not too much, but some – on some of us, maybe a lot of us.
If we don’t, we’ll someday face another crisis, this one entirely of our making.