Do Economists Say Government Deficits Impose a Burden on Our Kids Or Is It Just the Washington Post?4th November 2018
When it comes to the budget deficit and programs like Social Security and Medicare, the Washington Post has had difficulty keeping its editorial views out of the news section. We see this again today in an article on the October jobs numbers that told readers:
“A growing number of Wall Street analysts and economists say that the tax cuts and additional spending caused a temporary boost that will fade and leave future generations with a substantially larger debt burden.”
The piece actually doesn’t cite a single economist who complains about the debt burden on future generations. The extent the debt imposes a burden is questionable, since the interest is overwhelmingly paid to people in the United States. This means there could be a distributional issue within generations (from the group who pays taxes to the group getting interest), but not a generational issue.
There can be an issue that the deficits now being run will crowd out investment by raising interest rates. Less investment will mean the economy is less productive in the future. But this story is offset by the fact that more rapid growth tends to lead to more investment. In fact, the failure to run larger deficits earlier in the recovery slowed growth and investment, thereby imposing a huge burden on future generations in the form of a weaker economy. The Washington Post has literally never run a news story calling attention to the cost of austerity policies (which it supported) on future generations.
If the Post were to seriously discuss burdens on future generations it would also have to talk about government granted patent and copyright monopolies. These monopolies are ways in which the government pays for research and creative work. In effect, the monopolies allow companies to impose large taxes on consumers. If a patent monopoly allows Pfizer or Merck to sell a drug for $30,000 that would sell for $300 in a free market, it imposes the same burden on future generations as a tax of 10,000 percent on the drug.
Again, the Post literally never mentions the burdens imposed by patent and copyright monopolies, even though these come to close to $1 trillion a year, swamping the size of the interest burden on the debt. It is probably worth noting in this context that pharmaceutical companies are major advertisers for the paper.
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