It had to happen. The disaster unfolding in Greece is just too susceptible to over-simplification not to be seized upon by Republicans looking to go after Medicare and Social Security. First up in Missouri? Why none other than that astute economic thinker, Rep. Billy Long (R-7), who had this to say on the topic:
… . With the events in Greece this week, it is hard not to think about our own debt crisis.
Currently, the U.S. national debt stands near $18.3 trillion. To put that in context, the total size of the U.S. economy is $17.7 trillion. It is frightening to think our nation’s debt outpaces our economic activity; and, even worse, China holds 30 percent of our debt and counting. As the interest we pay on our debt continues to increase, I am concerned we may be on a similar path as Greece, which has debt close to double the size of its economy. That is why my colleagues and I are committed to sound fiscal solutions to curb America’s rising debt.
Reducing our spending, creating a balanced budget and responsibly continuing deficit reduction are the steps to take to reduce our debt, and I believe we are getting off on the right foot. Our next move should be concerning reforms must focus on Medicare, Social Security and entitlement programs. [Emphasis added.]
This refrain has been sporadically played on the right since 2010 – and none of the predictions of debt-related disaster have been realized. There are a number of reasons why the U.S. is not nor never will be like Greece (for instance, see here, here, or here).
While Long is right about the fact that the ratio of debt to GDP in the U.S. is very high, he, like many other Republican fear-mongers making the same claim, are wrong about the conclusions to be drawn from that fact. Many are still citing past research purporting to show that a high debt-to-GDP ratio damages economic growth. This research has been shown to be incorrect, and, in addition, there are many examples of countries that have a high debt level while enjoying respectable economic growth. One need look no farther than our own economy which in spite of our high debt-to-GDP ratio has also been enjoying sound economic growth.
Of course, one should also bear in mind that high as our debt is, it has shown little increase relative to other developed countries over the past eight years. The debt represents the sum of each yearly deficit and the $18 trillion debt Long cites includes the deficits from the period 2000-2007, when the debt was growing at its fastest rate ever. It includes the cost of the Bush war and the Bush financial implosion in 2008. In the past few years, deficits have been shrinking which helps to constrain the growth of the debt.
But more importantly, if Long seriously wants to cut the deficit and, hence, the debt, he is taking the wrong lesson from Greece and the European Union. Cutting spending hurts; it doesn’t help. As Daniel W. Drezner notes in the Washington Post:
As 2015 unfolds, the U.S. economy continues to rebound and the Eurozone economy continues to… not do that. So you would think that the debate over the merits of austerity would have been settled. After all the United States deployed expansionary fiscal and monetary policies for a longer time than Europe, with a more modest switch back to austerity after 2010. The Eurozone abandoned fiscal stimulus pretty early, the European Central Bank prematurely raised interest rates, and the result is an an economy that is underperforming the Great Depression.
Why in the face of the evidence would any one sincerely interested in the public good want to impose more austerity on the U.S? We seen how the actual austerian experiments have played out and, in spite of European persistence, the picture is not pretty – except, perhaps, for Germany where exports have been enhanced by the currency controls imposed on the rest of Europe.
Finally, Long’s insertion of the Chinese spectre into the argument can only be intended to spike the same fear of national decline and loss of dominance as the Greek comparison, neither of which is justified by the facts. Long is dead wrong about Chinese influence and the imagined threat it poses. He can’t even get the numbers right. China does not hold 30% of our debt. It is the largest foreign investor in U.S. debt, but, overall, only 34% of U.S. debt is held by all international investors together. In fact, a similar amount, 28%, is held by the U.S. government itself.
All of which is to say, Long, like his GOP confrères, is full of it. His spiel represents just one more dishonest way to go after government programs that Republicans have always loathed. Take a complex subject, make it simple, add a few few buzzwords, spin it according to ideology, and presto-bingo, you’ve created a curtain behind which to go after government that works for all its citizens, not just the wealthy big spenders who call the shots for Republicans. Billy Long is, as usual, just regurgitating predigested talking points, but don’t doubt that we’ll be hearing lots of the same type of talk during the coming weeks as GOPers seek to make their vendetta against Social Security, Medicare, and now Obamacare, sound respectable.