Jeff's Lunchbreak: Ben Carson - On the Issues, Part III

This entry is part of a series looking at Ben Carson's stance on political issues. For this series, I'm mostly looking at the issues identified on Carson's own website in the section, Ben on the Issues. I figured that was a good way to pick the issues he himself found most important to discuss, without anyone being able to accuse me of cherry-picking Carson's worst stances. An index of all the issues can be found on the first post in the series, Ben Carson - On the Issues, Part I.

This entry addresses Carson's stance on a Balanced Budget Amendment. Here's the gist of Carson's argument in his own words.

In January 2009, our public debt was $11.9 trillion. Now, it's more than $18 trillion. Interest payments on the debt now total about $250 billion, the 3rd single biggest item in the federal budget.
We must ratify a Balanced Budget Amendment to the Constitution in order to restore fiscal responsibility to the federal government's budget.

This point is partly pointing out a legitimate problem, partly presenting the stats in a misleading way, and then presenting a 'solution' that's not a good solution at all.

First, I'm going to steal some graphs I used in a previous post, How Big Is the National Debt? (which were themselves taken from US Government Revenue.com). Here are graphs of the U.S. debt and deficit by year as a fraction of GDP.

Federal Debt History as a Percentage of GDP

Federal Deficit History as a Percentage of GDP

Yes, the debt is high and needs to be addressed. On that, I agree with Carson. Still, the current deficit is not unprecedented, unless you naively look at absolute numbers instead of fraction of GDP. In fact, the current debt is less than the debt during WWII. Also, note how much the deficit increased temporarily right around 2009 - the time frame Carson picked out for his example of how much the debt has grown. That was right in the midst of the worst of the Great Recession, when tax revenues were at their lowest and stimulus spending was at the highest. Of course that type of deficit spending is going to push up the debt, but it's exactly what needs to be done in a recession. Imagine how much worse the recession would have been if it wasn't for that deficit spending.

In fact, that brings me to the point of why Carson's proposed solution is a bad one. Almost everyone agrees that budgets need to be balanced in the long term, but there are times, particularly in economic downturns, when the government needs the freedom to do deficit spending to invest in the economy. Paul Krugman has a fairly recent article in the Guardian, The case for cuts was a lie. Why does Britain still believe it? The austerity delusion, discussing this issue of stimulus spending vs. austerity. I recommend reading the whole thing if you have time, but there's one particularly informative graph, showing the economic growth from 2009-2013 of various countries plotted vs. the austerity of those countries. You'll note that harsher austerity correlates with worse economic growth, with the worst austerity actually causing the economy to shrink.

Short term stimulus spending during an economic downturn is good for the economy in the long run, and the reason why Congress shouldn't be forced to balance the budget every year. Of course, that doesn't mean Congress shouldn't balance the budget when the economy is doing well, but it needs the freedom to easily practice deficit spending when it's called for.

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