Farm Press Blog

National debt not greatest challenge facing the country


• Employment and economy are bigger problems than the deficit. • Healthy economy will improve deficit situation. • America faced economic crises in early days—and solved them.

“…that if everyone retains inflexibly his present opinion, there will be no bill passed at all for funding the public debts, and …without funding there is an end of the government.”

That is as accurate an account of the intractable nature of the U.S. Congress’ current position on fiscal matters as I have read anywhere. Inflexible positions means no one is willing to compromise; no one is willing to admit that someone else might have an idea worth considering; and no one can fathom that another legislator might have a solution to the quagmire that seems constantly to bog down Congressional action.

It was written in 1790 by Thomas Jefferson during a time when the country faced a real financial crisis, a crisis that threatened not just a bit of financial hardship, not just some inconvenience for the stock market or some discomfort for legislators who were vying for power in the new republic, but a crisis that threatened the stability, possibly even the survival, of the United States of America.

I read that line, among others that seem almost as pertinent today as they did in the early years of our democracy, in a new biography of Jefferson, Thomas Jefferson The Art of Power, by Jon Meacham. I recommend it to anyone who has even the least interest in history and in the growing pains that came with creating what we now consider the greatest country on earth.

Jefferson, and others, feared that forces inside and outside the country favored a return to some form of hereditary leadership—a monarchy. He feared that Alexander Hamilton, Secretary of the Treasury, was one of these. Jefferson, at the time, was serving at the country’s first Secretary of State. He held strong beliefs. But he also understood and used the power of compromise. His ability to bring disparate opinions into, if not harmony at least acceptance, was crucial in gaining support for the Declaration of Independence, among many other actions taken by America’s early leaders.

We survived. We avoided that fiscal cliff, which was considerably steeper and significantly more hazardous than what we face today, and emerged—slowly, perhaps—into what we believe to be the leading nation of the free world.

We still face challenges, but economist Paul Krugman wrote in a recent column that America’s national debt is not the biggest challenge facing our country.  He wrote that the economy currently is not in great shape but not in terrible shape either.

“The budget deficit isn’t our biggest problem, by a long shot,” he wrote. “Furthermore, it’s a problem that is already, to a large degree, solved. The medium-term budget outlook isn’t great, but it’s not terrible either — and the long-term outlook gets much more attention than it should.”

He says the deficit is largely a factor of a depressed economy. “The deficit will come down as the economy recovers: Revenue will rise while some categories of spending, such as unemployment benefits, will fall. Indeed, that’s already happening. (And similar things are happening at the state and local levels — for example, California appears to be back in budget surplus.)

“Still, will economic recovery be enough to stabilize the fiscal outlook? The answer is, pretty much.”

Krugman says actions already taken are working and that spending cuts and tax hikes already in place will bring the budget deficit down even more.

He doesn’t indicate that the economy is as sound as it should be, only that it’s not as bad as some make it out to be.

“It’s time to focus on other stuff — like the still-depressed state of the economy and the still-terrible problem of long-term unemployment.”

He lashes out at the intractables, those who see only one solution to a complex problem and a problem that may not be as dire as some make it out to be.

Jefferson would have recommended some middle course, a compromise that would maintain the country’s ability to meet its obligations. Threatening to shut down the government would have been unthinkable.

Discuss this Blog Entry 3

Robert Bone (not verified)
on Jan 23, 2013

This is a very good article. It should be sent to John Boehner, Eric Cantor, and Paul Ryan in the US House. Also send to Mitch McConnell in the US Senate.

David Pafford (not verified)
on Jan 23, 2013

There are some reasonable points in the article. The economy isn't as bad as it could be. But it remains to be seen whether consecutive $1T+ deficits are sustainable. Furthermore, the other commenter (Bone) ought to consider the fact that the Republicans caved on tax increases while getting NO meaningful spending cuts in the last round of "inflexible" negotiations. It's kind of stupid to think that Republicans have a monopoly on inflexibility. I wish they would be a little more inflexible next time, and actually get some spending cuts before bending over and allowing tax rates to go up. If no one stand up and demands some kind of change in the structure of our entitlement system, we may indeed face an "America threatening" situation - at least a threat to the free and opportunity-filled America we grew up with.

Terry Nuhn (not verified)
on Jan 23, 2013

Our trillion dollar yearly deficits have credit agencies threatening to lower our credit rating. Paul Krugman certainly knows this, but he continues to dismiss the national debt as important. My personal opinion is that Krugman and his friends want future crises to justify continuing to raise taxes. It's about "economic justice", not economic growth. Whenever there's robust growth, they always complain about the gap between the rich and the poor. Only when the rich are taxed out of existence will they want to cut spending. Such policies will make it hard for some farmers to continue in business.

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