Deficit owls flew and the ghost of Alexis de Tocqueville was invoked at The Atlantic's Economy Summit this week. The topic at hand: The debt in all its reified forms, ranging from public to private, mortgage to student, near- to long-term, and more.
An impressive roster of Washington's elites gathered to discuss the role of debt in the U.S. economy, including Obama adviser Gene Sperling, former Treasury Secretary Robert Rubin, New York Times Washington Bureau Chief David Leonhardt, former CBO director Alice Rivlin (crowned by Atlantic Washington Editor-at-Large Steve Clemons as "the economy's national treasure"), and former Federal Reserve Chairman Paul Volcker.
But while the terms they used often sounded safe and unobjectionable - who could be against the concept of "balance"? or "de-leveraging"? or "long-term investments"? -- these safe-sounding words disguised deep differences among the speakers.
The most helpful tool is to divide the players by the question they're trying to answer. The first is "how should we spend the government's money to set the stage for a healthy economy in 20 to 30 years?" Although seemingly focused on the long-term, this group, which included infrastructure advocates like David Leonhardt and former Pennsylvania Governor Ed Rendell, were not deaf to short-term economic needs - but across the board, they argued for a retooling of the government's balance sheet with an eye toward long-term cost saving moves: investments in transportation like high speed trains that connect major cities, early childhood education, and high-tech job training. Ticking off almost every policy topic - climate change, transportation, technology infrastructure, education, energy, and onwards - this group looked to return the U.S. economy to historical "trend lines" for economic improvement.
They had some overlap with a second group, who answered the question, "When and how much should we worry about the national deficit," with "now." Alice Rivlin and former National Economic Council Director Lawrence Lindsey sat in this camp, along with many others. As Lindsey said, "The debt situation will get much worse in the 2020s... We have to deal with it now or hit a brick wall in a decade." Alice Rivlin, as Atlantic senior editor Derek Thompson wrote, hoped for more willingness among Congressional democrats to discuss entitlement reform, arguing that we should be worried about the long-term today. Here's a case where language and framing bring together two fairly different thinkers: Lindsey supports the Ryan budget as a "credible solution" to the debt problem and wide-spread slashes in spending, while Rivlin focused on maintaining high levels of deficit in the near-term while forging balanced, bipartisan solutions to deficit reduction for the next two decades. Yet, they both attack the same question, and as a result, used many of the same key words to describe their proposed solutions.
Group three, who did most of the day's rabble-rousing, reframed the question entirely, asking, "What kind of debt should we be most worried about?" Led by Australian economist Steven Keen, Governor's Woods Foundation Chairman Richard Vague, and The Atlantic's Steve Clemons, this group pressed the issue of family debt, arguing that the national deficit is a secondary concern to the large numbers of loans, unchecked household spending, and crippling student debt that has exploded over the past ten years. One kind of tenuous private debt - huge, unsustainable mortgage loans - was discussed in the many articles about overly-risky mortgage loans issued before the 2006-2007 housing crisis. But the topic has inched its way back into public attention, picking up arguments about poor spending habits and advocates for "generational justice" who bemoan punishing levels of student loans (which, it's worth noting, may be blown out of proportion, but again, we're not taking sides here). The most interesting aspect of this group's article was historical: in the lead-up to the Great Depression, they claim, the ratio of private debt to GDP mimics that of the lead-up to the Great Recession.
Unsurprisingly, no one used the term "sequester" politely, and few people were willing to speak kindly or confidently about Congress (including current and former Congressmen). Volcker also threw in some sharp barbs about the money-bloated lobbying establishment in Washington, noting that D.C. has remained prosperous despite stagnating incomes everywhere else in the country.
Notably, a perennial Washington rhetorical touchstone, "job creation," was conspicuously absent for most of the day, only making an appearance in the occasional indignant audience member question. So, it seems, however you choose to talk about debt, it's difficult to propose solutions that suit everyone.
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