Concord Coalition Executive Director Robert L. Bixby and National Field Director Phil Smith joined me on the latest Facing the Future. We spent the program answering a wide range of fiscal-policy related questions submitted by listeners in this second annual Q&A session.
Bixby kicked off the program by covering the basics, defining the difference between the national debt and annual deficits. He also explained the various types of government debt, how they are utilized, who holds them and how they can impact the economy.
In response to listener questions, Bixby also discussed theories and arguments often used against reducing budget deficits, such as Modern Monetary Theory and supply-side economics.
“This is the thing that I worry about, economic theories that have some truth behind them that are distorted once they get into the political realm into total free lunches,” Bixby said.
He gave the example of tax-cut advocates proclaiming that such cuts pay for themselves, which Bixby said is an exaggeration of the theory that a tax cut can help stimulate the economy in the short and long-term.
“I’m seeing the same type of political phenomenon develop here with MMT, which is less concern about budget deficits translating into ‘budget deficits don’t matter, and we can just print money with no consequences,’ ” he said.
Bixby and Smith highlighted trends in the budget, such as the growth of mandatory spending and shrinking domestic investments, and responded to questions about ideal reforms aimed at reducing deficits.
Bixby said that demographic and political realities are such that there should not be major carve-outs or exclusions when it comes to reform. Meaning, both revenue and spending reforms must be considered. “Any bipartisan group that has looked at that has always said you have to put everything on the table,” he said.
Smith added that there are a lot of things we can do to help out the process, like encouraging biennial budgeting. But he cited economist Rudy Penner in saying, “the process isn’t the problem, the problem is the problem.”
“We can work around the edges … but if you look at the problem, it’s on both sides of the ledger,” Smith said.
A listener asked about the fiscal soundness of policy proposals by presidential candidates.
Bixby said, “You don’t expect them to come out and say the first thing they’re going to do is reduce the deficit and pay down the debt … what I am looking at is, ‘do you acknowledge that the rising debt is a problem that needs to be dealt with … and are the methods that you propose for paying for new initiatives credible?’ ”
Smith said, “A great question, if you run across a candidate, is to simply ask them ‘since the debt is growing faster than the economy and scheduled to continue growing faster than the economy, what are your plans for the federal budget … what are you doing to be fiscally responsible as a presidential candidate?’ ”
Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, iTunes, Google Play Music or with an RSS feed. And follow Facing the Future on Facebook.