Don't Worry About the Debt?

My colleague Conor Clarke has a piece in Slate today making the counter-intuitive claim that maybe our debt isn't that scary, after all. Income and quality of life improve with each generation. Our economy's nature is to grow. Improvements in technology make our work more productive (Facebook notwithstanding) and invariably make the country richer. Conor writes: "Just as there are good arguments for imposing costs on the present-day rich for the benefit of the present-day poor, there are good arguments for imposing costs on America's wealthy future for the sake of its relatively impoverished present."

Boy I hope he's right! But paragraphs like this make me worry:

This is from the Political Economy Research Institute's report on creating decent jobs in the United States:

This study finds that, absent structural changes to the U.S. labor market, the U.S. economy will be no better at creating decent jobs in 2016 than it was in 2006. A decent job is one that pays at least enough to provide a small family with a safe, healthy, but modest standard of living. This unfavorable projection contradicts a popular assumption that the jobs of the future will necessarily provide workers with improved opportunities to raise their living standards.

I don't doubt that the country will continue to grow and that our iPhones will continue to improve in wild and unpredictable ways. But you can't pay off debts with with smaller, better smartphones. You need bigger salaries and better-earning Americans -- a larger pie with more taxable income. And I see too much evidence that the pie isn't growing fast enough to pay down the debt we're accumulating.

Where's the evidence? Look at the same PERI report predicting only 0.4 percent percentage points growth in decent jobs (at least 200 percent of the poverty line) in the next decade. Look at our decade-long inability to create jobs in the non-health/education private sector. And look at this graph from the CBO, which appears to anticipate no impeding windfall in government revenue.

In fact, one of the factors arguably widening that big blue swath, driving up the cost of health care, and blowing up our debt is, well, a technology revolution. Writes Daniel Callahan: "In a rare instance of consensus, health care economists attribute about 50% of the annual increase of health costs to new technologies or to the intensified use of old ones."

So it's far from certain that future debts will be nibbled away by the strong tide of innovation. I consider myself a decently optimistic person, but I don't know that I can keep up with Conor's good cheer in this case.