The burden of government consumption is now, and frequently felt in gruesome, heartbreaking ways right now. The debt burden left behind to the sainted grandchildren is easy compared to what we're enduring, and it’s not even close.
What you’ve just read is not the consensus, however. In a recent AIER piece, Stefan Barti wrote that government consumption paid for with debt preserves “the benefits of spending while muting the immediate pain.” Barti is incorrect.
Too see why, just contemplate a few relatively modern spending blunders committed by a federal government taking in too much tax revenue now and expected to take in much more in the future (a principal argument and lament of The Deficit Delusion). Think Vietnam. Would any reader suggest past generations benefited from the life and economy sapping waste of the war relative to the debt left behind? What about LBJ’s “War on Poverty”? Who suffered more? The so-called “beneficiaries” of LBJ's wars, or “the grandchildren”?
Does anyone think future generations would take George W. Bush's war in Iraq over the debt they’ll inherit? What about the coronavirus lockdowns? Would future generations prefer to have their jobs, education, businesses and ability to live their lives taken from them for months, and sometimes years, and "paid for" by the $3 trillion Cares Act, or would they rather inherit the low-interest debt run up by a government that excessively taxes the citizenry now?
The excellent Don Boudreaux offers a counter, and compelling point that “Had all Cares Act spending been required to be funded with current taxes, that spending would have been only a fraction of $3 trillion because Americans in 2020 would not have tolerated such a gargantuan increase in their taxes.” Boudreaux could perhaps be persuaded, however, that $3 trillion in borrowing was an immediately painful tax paid for by every American, and that the tax bill was paid right away too. Boudreaux's explicit point is that relatively light taxation now enables these wasteful, debt-infused expenditures paid for in the future, but that’s not how debt markets work. Unless Americans were already excessively taxed now such that lenders trusted tax revenues, there would be very little U.S. debt (another principal argument of The Deficit Delusion).
More important, Boudreaux could perhaps be persuaded that relative to the immediate horrors of government consumption, the debt is the easy inheritance. For evidence we simply pivot to Boudreaux’s Cato Institute colleague Romina Boccia, and her lament that as debt-financed entitlements “consume a larger share of the budget, this exerts downward pressure on other budget priorities.”
Ok, but what budget priorities? Cato was created to stand athwart the federal government, and past government spending errors are by Boccia’s own admission doing just that. What she and Boudreaux lament is what should have them optimistic.
Per Boccia once again, the ability of the federal government to do seriously stupid things shrinks by the day due to past errors and debt run up to fund past errors. It’s the argument in The Deficit Delusion’s penultimate chapter, that mindless as Social Security, Medicare and myriad other instances of government consumption are (see above), these at times bloody mistakes paid for right away through the effects of central planning and excessive taxation restrain future government error.
Which is precisely the point of The Deficit Delusion and this opinion piece: debt is the exceedingly easy part. If future generations inherit debt and a government hamstrung by the debt, they’ll be very fortunate relative to those who had to suffer the spending implications of the borrowing, along with the excessive taxation that enabled it.
