Does Candidates' Debt Math Add Up?
MICHEL MARTIN, HOST:
This is TELL ME MORE, from NPR News. I'm Michel Martin. Coming up, we take a look back 25 years to the 1987 stock market crash, which some people still call Black Monday. We'll talk about how that even compares to the more recent market turmoil and if there's anything we can learn from it about market ups and downs today.
But first, we want to take a look at this country's financial picture in the here and now. It's part of our effort to take a deeper look between now and the election at some of the major issues and what the candidates are promising to do about them. We're calling the series Solve This. Today, we're focusing on the national debt.
The Treasury Department estimates that the debt has reached $16 trillion, and if you've watched the debates or the ads or the speeches, then you know that it has become a major issue in the race for the White House. Each major party candidate - President Obama or Republican challenger Mitt Romney - claims he has a credible plan to bring it down and the other guy, well, doesn't.
So what about that? We've called Robert Sahr. He's a political scientist with Oregon State University. He happens to be spending the academic year at George Washington University here in Washington, D.C., and he's done extensive work on the politics of the national debt. And he's with us now.
Welcome. Thanks for joining us.
ROBERT SAHR: Thank you for having me.
MARTIN: So when did or why did the debt become a major issue this election season? When did that start to happen?
SAHR: Well, in some ways, I would argue it probably started in the 1980s. One of the really interesting things to me is the degree to which Republicans have really defined the national debt and the deficit not as a question of the difference between taxing and spending, but as Ronald Reagan said, it's not because we tax too little, but because government spends too much.
And that's really been the way that - a very successful effort on the Republican part to define it that way so the taxes are almost off the table.
MARTIN: Well, let's just take a step back, and I am asking for an opinion here.
MARTIN: Why is it a big deal?
SAHR: A lot of economists will argue - at least in the short-term - when you're having a severe recession, that increasing the national debt is not a bad thing. Over the long run, you do not want to increase the national debt and want to figure out how to reduce it.
And one of the things that's been interesting to me is that the national debt more than doubled under Ronald Reagan, almost doubled under George W. Bush, but there was almost no discussion of the national debt at that point, or the deficit. In fact, Vice President Cheney famously said that Ronald Reagan proved that deficits don't matter.
But as soon as January 20th, 2009 when Barack Obama became president, suddenly, we started talking about the deficit and the debt. Very interesting, that shift.
MARTIN: Well, why is it that way? I think the Democrats - particularly in the Democratic National Convention in selecting former President Bill Clinton as one of the major speakers - wanted to remind the country that he actually left with a surplus, with a budget surplus.
MARTIN: So why is it that even though the debt has doubled under those two - doubled in each of those two Republican administrations, that the Republicans continue to have an advantage on the issue? Why is that?
SAHR: I think, for some reason, they were able to define the Democrats - so much as Ronald Reagan did - as the party of tax and tax, spend and spend. And most people don't have much sense of the budget or the deficit or anything else, and so you can get impressions or stereotypes established that I think are very important.
And they, to some degree, are resistant to specific facts, and the fact that people do remember that not only did we have a surplus under Bill Clinton, but the national debt actually fell by about a sixth when he was president, which is pretty amazing when you think about the fact that that's the only president since the 1960s under whom we've had a surplus and certainly a reduction in the national debt.
MARTIN: But why have Republicans not paid a political price for the fact that the debt has twice ballooned under their watch?
SAHR: That's, to me, an amazing puzzle. And, again, I think partly, it's related to stereotypes. Partly it's related to the fact that so-called issue ownership, that Democrats are seen as the party of spending and Republicans are seen as the party of fiscal discipline, even though the facts wouldn't support that.
And in addition, Republicans have this huge outside government way of penalizing Republicans who stray in relation to tax changes. You might see a change after the election on this.
MARTIN: You mean an advocacy apparatus.
SAHR: Advocacy. Yeah.
SAHR: In a sense, it's kind of an enforcement mechanism, saying that anybody who diverges from the anti-tax increase orientation is likely to face major difficulties and challenges. And that's happened. And so one of the things it seems to me is that what you have is in some way - President Clinton mentioned during the Democratic Convention - sort of a battle over the arithmetic.
But it's a battle, it seems to me, not just between candidates and parties, but also between arithmetic on the one side and the politics on the other side. And the politics work out very differently for Democrats and Republicans, and also for third party candidates.
MARTIN: Just briefly, if you could remind us why the debt ballooned as significantly as it did under President Reagan and then under President George W. Bush.
SAHR: Most economists will argue that after all, the deficit can result - it results from the difference between taxing and spending. So the change in taxes or a change in spending can either increase or decrease the size of spending. And so under Bill Clinton, you had an increase in tax at the high income levels and you had a reduction in spending. So both took place.
Under Ronald Reagan, you actually had a very large tax reduction that was not offset by very large spending reductions, and in fact, spending reductions were a lot smaller, and the same thing that happened under George W. Bush. So most economists will argue if you look at the combination of taxing and spending, the biggest factor has simply been that tax cuts have been much larger than spending cuts.
MARTIN: If you're just joining us, you're listening to TELL ME MORE, from NPR News. I'm Michel Martin. And we're speaking with Professor Robert Sahr about what the president candidates say they will do to solve this country's debt problem. This is part of our series called Solve This.
I want to play a clip of former Massachusetts Governor Mitt Romney, the Republican challenger, talking about this issue at Tuesday night's debate. Here it is.
(SOUNDBITE OF PRESIDENTIAL DEBATE)
MITT ROMNEY: We've gone from $10 trillion of national debt to $16 trillion of national debt. If the president were reelected, we'd go to almost $20 trillion of national debt. This puts us on a road to Greece.
MARTIN: What's the basis of that assertion? And is that a credible assertion, that the debt could jump to $20 trillion during a second Obama term? And what about his argument that this leads the U.S. on the path to Greece - which, I mean, if people are following the news, is suffering some terrible social turmoil resulting from the need to make drastic cuts in the budget. And that's affecting people's lifestyles very dramatically.
SAHR: One of the interesting things is that as a percent of the economy, the deficit was actually largest in 2009. And, of course, that budget year, it started under George W. Bush and had obviously ended under Barack Obama. Each year since then, or at least most years since then, as a percent of the economy, the national debt has actually fallen, even though in dollar terms, it's very large.
And so I don't know if in terms of the future there are some arguments to be made that it will continue to grow under Barack Obama if he were reelected. The other side of it, of course, is what exactly would Mitt Romney do if he were president, because the politics of it make it very, very difficult for him to make cuts.
People don't like government in the abstract, but they very much like government in the specific programs. So politically, it's a challenge for him.
MARTIN: Well, speaking of which, I mean, that is President Obama's argument back to Mitt Romney. And I'll just play a short clip from President Obama's comments about Mr. Romney's plans, or lack thereof, during the debate. This is his point of view. Here it is.
(SOUNDBITE OF PRESIDENTIAL DEBATE)
PRESIDENT BARACK OBAMA: If somebody came to you, governor, with a plan that said, here, I want to spend seven or $8 trillion, and then we're going to pay for it but we can't tell you until maybe after the election how we're going to do it, you wouldn't have taken such a sketchy deal. And neither should you, the American people, because the math doesn't add up.
MARTIN: What about that?
SAHR: That is, in fact, as I mentioned earlier, I kind of battle between the politics and the arithmetic, because it is difficult and, in fact, it illustrates one of the problems - or one of the orientations Republicans have to take. Since people don't like government, they can attack government spending, but they avoid getting very specific. And people do tend to assume there's lots of waste in government spending, and so you can cut the waste and balance the budget and still maybe even reduce taxes.
And so - but the problem is the arithmetic makes it very difficult, and one of the ways that Mitt Romney avoids at least some of the political costs in the short-term is by not being very specific on either the spending cuts he proposes and will have to propose, or also the tax changes. He's left those very undefined. Politically, he's borne some penalty for that, but not a lot of penalty.
MARTIN: Does President Obama's math work? I mean, he's saying that there needs to be a slower, a more gradual, and what he - he uses the word balanced approach to reducing the deficit by taxing the highest income earners and making some other changes like that. And he says that this is necessary, because otherwise you will shock the system and that you will have a lot of social turmoil and a lot of personal pain, and that's what he says he's trying to avoid. Does his math work?
SAHR: It probably works better, but of course, one of the problems over the politics of it right now is Republicans have so much defined so that any tax increase is fundamentally bad, that despite the fact that President Obama has said you want to increase tax on the upper income, there's still the huge tax reductions under George W. Bush that apply to lower incomes. And so even though there'd be some effect of that, it'd be very difficult to make enough change on taxes to offset that.
MARTIN: Finally, there was a bipartisan effort to address this issue with a commission - that's kind of the time-honored way of giving both parties political coverage, is you get some, you know, famous, credible, well-respected people from both parties to kind of work together behind closed doors, present a plan, and then everybody can embrace it. So everybody takes some pain, everybody takes - everybody gets something that they want. Everybody gets something that they don't want, and everybody sort of links arms around that. That's the way you do some sensitive things like closing military bases, which people tend to not want to do.
There was such an effort. It was called the Simpson-Bowles group.
MARTIN: Why didn't their efforts gain any traction?
SAHR: The president, I think, embraced them in general terms, but not specific terms. And part of the reason is because they were calling for large cuts in programs that are very important for Democrats, including changes in social programs, so that even though, you know, I think President Obama has said it's kind of a framework for discussion, it's not something that, in fact, led very far.
And it's very difficult for Republicans to embrace, because it also called for tax increases, which Republicans have ruled off the table. It's going to be very interesting to see, if Mitt Romney is elected president, how the tax increases will, again, maybe reemerge, maybe through fundamental change of the tax structure through some kind of consumption tax or something else. And how will it be done in a way that will avoid the blame that Republicans cast on any candidate or official who pushes for tax increase?
MARTIN: Robert Sahr is a political scientist with Oregon State University. He's currently spending a sabbatical year at George Washington University. He is, as we said, a student of the national debt and the politics of the national debt, and he was kind enough to join us in our Washington, D.C. studios.
Professor Sahr, thank you so much for joining us.
SAHR: Thank you for having me.
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